Indian refiners may cut Russian crude imports in November after US sanctions threat: Bloomberg

Source: Bloomberg

Indian refiners are considering reducing crude oil imports from Russia in November, following the signing of a comprehensive sanctions bill by the United States last week that introduces new threats of punitive tariffs.

As the world's third-largest crude oil buyer, India has sourced over half of its imports from Russia in recent months, driven by high global oil prices and disruptions to Middle Eastern supply. However, over the past few days, major refiners have begun actively seeking alternative sources, according to people familiar with the matter, who spoke on condition of anonymity as the discussions are not yet public.

Key Developments

• The new US law authorizes President Donald Trump to impose tariffs on countries purchasing Russian crude oil.
• India is the largest buyer of Russian seaborne oil and had previously faced similar tariffs last year, which were later lifted.
• According to data from Kpler, Russian imports slowed in September to an average of approximately 1.9 million barrels per day, accounting for over 35% of total imports — the lowest level since April.

Challenges in Replacing Russian Supply

Replacing Russian crude is not straightforward, given the scale of supply far exceeds that of alternatives such as Venezuela or Iran, and prices remain elevated.

• According to Argus Media, the cost of delivering Russian Urals crude to India stood at around $133 per barrel last weekend.
• Middle Eastern grades such as Oman and Murban are several dollars more expensive.
• Global crude markets remain under pressure as Persian Gulf exporters struggle to restore shipments through the Strait of Hormuz.
• Meanwhile, Indian demand is rising, with record procurement volumes of 5.4 million barrels per day driven by a new refinery in Rajasthan and expansions at existing facilities.

Uncertainty Ahead

Negotiations for November Russian crude typically begin in the final week of the month, placing the next purchasing cycle in a period of uncertainty. India will be watching closely to see whether Washington applies measures to all major buyers of Russian energy, including China.

The new law allows the Trump administration to impose tariffs on goods from major buyers within 30 days, with rates potentially reaching 100%, effectively placing risk decisions in the hands of the government. Over the past year, India has repeatedly adjusted its Russian oil purchases in response to shifting pressure from Washington, though New Delhi maintains that its purchasing decisions are primarily based on securing affordable energy for its 1.4 billion people.

Expert View

"As long as it remains competitive, India should continue buying Russian crude," said Ajay Srivastava, founder of the New Delhi-based Global Trade Research Initiative. "India should ignore US tariff threats because these threats are endless. The US may soon invent more ways to impose tariffs."

Original article: Bloomberg