US sanctions on Russian oil giants fail to halt Indian purchases

Indian Oil Corporation (IOC), the country’s largest refiner, has purchased five cargoes of Russian crude oil for delivery in December from non-sanctioned sellers, according to traders who spoke to Reuters. This marks a resumption of Russian oil imports even as Washington has urged India to halt such purchases.

Last week, the U.S. imposed sanctions on Rosneft and Lukoil, Russia’s two largest oil companies, in an effort to pressure President Vladimir Putin to end the war in Ukraine. Following these sanctions, several Indian refiners — including state-run Mangalore Refinery and Petrochemicals Ltd (MRPL), HPCL-Mittal Energy Ltd, and Reliance Industries, operator of the world’s largest refining complex — paused their Russian oil imports.

However, IOC’s head of finance, Anuj Jain, has stated that the company will continue buying Russian crude as long as the shipments comply with sanctions. Over the past three years, India has emerged as the largest buyer of Russian seaborne crude, attracted by steep discounts resulting from international sanctions imposed by the U.S., the European Union, and the UK, which also target shipping.

According to one trade source, IOC has purchased approximately 3.5 million barrels of ESPO crude at near parity to Dubai quotes for delivery to an eastern Indian port in December. The source did not disclose the identities of the sellers. IOC did not respond immediately to a request for comment outside of working hours.

Two sources said the refiner had previously cancelled seven or eight Russian cargoes following the announcement of the latest U.S. sanctions, as those shipments were supplied by subsidiaries of sanctioned entities. These sources requested anonymity due to the sensitivity of the matter.

Before the recent U.S. sanctions, Rosneft was a major supplier of ESPO crude. While most Russian ESPO oil from the Pacific port of Kozmino has traditionally been exported to China, demand there has recently declined.

State-owned Chinese refiners have suspended purchases in response to U.S. sanctions, and independent Chinese refineries have used up their import quotas. This drop in demand has caused ESPO crude prices to fall, making it an attractive option for Indian buyers.

By Tamilla Hasanova