New US sanctions threaten Russian oil imports to India

New US sanctions against the Russian Federation may affect the sale of Russian oil to India, which is the largest buyer of its offshore oil. This was reported by Reuters, citing sources in the industry. The sanctions would also make it more difficult for India’s state-owned refiners to secure annual supply agreements. The sanctions target Russia’s leading tanker group Sovcomflot, which Washington has accused of being involved in violating G7 price caps on Russian oil. Indian refiners are worried that the latest sanctions will create “problems” in getting vessels for Russian oil and could raise freight rates. This may narrow the discount on oil, which is purchased from traders and Russian companies on the terms of delivery,” the report said. In addition, Russia will likely have to push even more volume through traders to protect against the risk of further sanctions. In 2023, the Russian Federation became the largest supplier of oil to India. Thanks to futures and spot purchases, India imported about 1.66 million barrels per day of Russian oil in 2023, compared to an average of 652,000 barrels per day in 2022. Rosneft had offered a discount of $3-3.50 a barrel to prices in Dubai, which is more expensive than major refiner Indian Oil’s current deal with Rosneft, which expires on March 31, with a discount of 8-9 USD to Dubai quotes for cost and freight basis. However, refiners see the proposed discount as insignificant given the uncertainty caused by the sanctions.