State-owned oil refiners in India, the top importer of seaborne Russian crude, believe the impact from the latest US sanctions may be temporary as Moscow finds workarounds, and the new Trump administration takes a softer line against the OPEC+ member.
Processors are hopeful that the new US government may help to blunt the impact of the far-reaching curbs announced last week, if incoming officials take a conciliatory approach toward Russia, according to people familiar with the matter. At the same time, companies are seeking more optional volumes from Saudi Arabia and Iraq under term contracts to guard against shortfalls, they said, declining to be identified as matters are confidential.
The global oil market has been thrown into turmoil in recent days — with Brent crude hitting the highest level in five months — as the outgoing Biden administration announced its boldest package of sanctions yet against Russia’s oil industry. The restrictions, which will kick in after a grace period, pose a serious challenge for refiners in India as they’ve become major customers for Russian oil following the invasion of Ukraine in 2022.
Indian refiners are confident that losing access to cheap Russian crude would be only temporary given that Moscow would be under tremendous pressure to find a way to restore flows if China and Turkey remained its only other major buyers, said the people.
Following the sanctions announcement, a senior Indian government official said on Monday that the country would still accept delivery of all cargoes that were both booked ahead of the restrictions, and delivered to the country during a so-called wind-down period that runs to March 12. Still, refiners are waiting for opinions from legal teams and banks, the people said.
The fate of the latest US crude curbs — which aim to cut Moscow’s income from energy sales — are tied to the outcome of the conflict in Ukraine. President-elect Donald Trump said last week a meeting with Russian President Vladimir Putin was being set up, raising the prospect that the incoming US leader could push to start negotiations to end the war.
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