India eyes continued Russian crude imports despite US sanctions

State-owned oil refiners in India, the world's largest importer of seaborne Russian crude, believe the latest round of US sanctions may only have a temporary impact, as Moscow is expected to find workarounds.

According to Bloomberg citing sources familiar with the matter, they are hopeful that the incoming Trump administration may take a softer approach toward Russia, alleviating some of the pressure from these sanctions, per Caliber.Az.

Refiners are actively seeking additional volumes from Saudi Arabia and Iraq under term contracts as a precaution against potential supply shortages, the sources added. These developments come amid turmoil in the global oil market, with Brent crude reaching its highest price in five months following the announcement of the US sanctions, which are set to take effect after a grace period.

The sanctions, which represent the most severe measures yet imposed on Russia’s oil industry, pose a significant challenge for Indian refiners, who became major customers for Russian oil after the invasion of Ukraine in 2022.

Indian refineries are confident that any disruption in Russian crude imports will be short-lived, as Moscow will likely be under pressure to restore oil flows, particularly if China and Türkiye remain its primary buyers. In response to the sanctions, a senior Indian government official confirmed that the country would still accept cargoes of Russian crude booked prior to the restrictions, as well as those delivered during the wind-down period until March 12.

Despite this, refiners are awaiting advice from legal teams and banks on how to navigate the new sanctions, the sources said. The effectiveness of the US sanctions, which aim to reduce Russia's energy revenues, hinges on the outcome of the conflict in Ukraine. President-elect Donald Trump recently indicated that a meeting with Russian President Vladimir Putin was being planned, which could signal a shift toward diplomatic negotiations aimed at ending the war.

India, which imported 2.07 million barrels per day (bpd) of Russian crude in July, is the largest buyer of Russian oil. As long as the sanctions do not tighten further, India's demand for Russian crude is expected to continue to grow, according to a source in the Indian refining industry.

Meanwhile, the Indian government has announced it will deny unloading to tankers subject to US sanctions. However, vessels chartered before January 10 and unloading before March 12 will be exempt from this restriction. Refiners are still awaiting clarification from legal and financial experts on how to proceed under the new rules.

By Tamilla Hasanova