【By Observer Net, Liu Bai】The Trump administration announced on the 22nd that it would sanction two major Russian oil companies, Lukoil and Rosneft, which is the first direct sanctions against Russia during Trump's second term.
Reuters reported on the 23rd, citing industry sources, that Indian refining companies are preparing to significantly cut their imports of Russian oil in order to comply with new U.S. sanctions against Russia, which could remove a major obstacle for India-U.S. trade agreements. Another source told U.S. media that Russian oil supplies to India are expected to drop to nearly zero.
A source familiar with the matter told Reuters that Reliance Industries, India's largest buyer of Russian crude oil and a private enterprise, plans to reduce or completely stop importing Russian oil, including terminating large long-term purchase agreements with Rosneft.
When asked about whether the company plans to cut its imports of Russian crude oil, a spokesperson for Reliance Industries responded: "We are adjusting the scale of our Russian oil imports, and Reliance will fully comply with the guidelines issued by the Indian government."
Reliance Industries operates the world's largest refinery in India. The company has signed long-term agreements with the Russian oil giant Rosneft, purchasing nearly 500,000 barrels of crude oil per day. In addition, Reliance Industries' refineries also purchase Russian oil through intermediaries.
Traders revealed that Reliance Group recently purchased spot crude oil from the Middle East and Brazil, which may be used to partially replace Russian supply. A Middle Eastern trader who has been in contact with Reliance Group said that indeed, people were looking for supply in the market on the 23rd.
One source said that before the U.S. took sanction actions, due to the EU's ban on refined products produced from Russian crude oil that will come into effect in January next year, Reliance Industries had already considered stopping the import of Russian crude oil into one of its export-oriented refineries.
Mumbai, India, a refinery of Bharat Petroleum Corporation. Visual China
A person directly involved in the matter stated that after the U.S. sanctioned two Russian oil companies, state-owned Indian refining companies, including Indian Oil Corporation, Bharat Petroleum Corporation, and Hindustan Petroleum Corporation, are reviewing their Russian oil trade documents to ensure that no oil comes directly from the sanctioned Rosneft and Lukoil.
The largest shareholder of Naya Energy, an Indian refining company, is Rosneft, and the company also purchases oil from this Russian state-owned oil company. Naya Energy did not respond immediately to requests for comment.
Trade sources said that Indian state-owned refining companies rarely purchase directly from Rosneft and Lukoil, as their procurement is usually conducted through intermediaries.
The Indian Ministry of Petroleum and state-owned refining companies did not respond immediately to requests for comment.
A refinery executive told Bloomberg that after the U.S. announced sanctions against Russian oil companies, the amount of oil supplied by Russia to India's main refineries is expected to drop to nearly zero.
A refinery source who requested anonymity said: "Import volumes will be significantly reduced. We expect it will not immediately drop to zero, as some crude oil may still enter the market through intermediaries."
RBC Capital Markets analyst Helima Croft wrote in a report: "If the Trump administration actually acts on today's statements, we expect refiners seeking access to U.S. capital market channels to abandon Russian crude oil."
Another Indian refinery official said: "It all depends on the banks. If the banks agree to settle payments, we will buy; otherwise, our imports will be zero."
Since the outbreak of the Ukraine-Russia conflict, India has become the largest buyer of discounted seaborne crude oil from Russia, with an average daily import volume of about 1.7 million barrels in the first nine months of this year.
Trump has repeatedly pressured India to stop buying Russian oil, and imposed a 25% punitive tariff, making the tariff rate for India reach 50%. Currently, the U.S. and India are negotiating a potential trade agreement, which could lower the tariffs India faces in exchange for India gradually reducing its crude oil imports from Russia.
Trump previously told the media that Indian Prime Minister Modi had promised to stop buying Russian oil. However, the Indian side has not confirmed this statement.
According to TASS, regarding the latest U.S. sanctions, Maria Zakharova, a spokeswoman for the Russian Foreign Ministry, said at a regular press conference that this would not cause trouble for Russia, and the Russian side has already developed "strong immunity" against such restrictions.
"We believe this move will have extremely counterproductive effects," Zakharova said, adding that the U.S. action is not conducive to sending a signal for resolving the Ukraine-Russia conflict through negotiations.
She also said that regarding the framework for solutions to the Ukraine issue discussed by the U.S. and Russian leaders, the Russian side believes there are no major obstacles.
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