India’s Russian Crude Imports Slide After US Sanctions, Further Declines Expected
India's Russian oil imports dropped by nearly a third following new US sanctions on November 21, prompting refiners to cut purchases from designated entities. Imports averaged 1.8 million bpd in November, but post-sanction flows are tracking around 1.27 million bpd. Analysts anticipate further declines in December, potentially stabilizing around 800,000 bpd. India is diversifying suppliers and utilizing opaque trade routes, while Russia employs adaptive logistics. The decline is expected to be temporary as supply chains reorganize to balance geopolitical and economic factors.
India's imports of Russian crude oil experienced a significant drop, nearly a third, following the implementation of stringent US sanctions on key Kremlin-linked exporters on November 21. This measure prompted several Indian refiners, including Reliance Industries and HPCL, to halt purchases from designated companies to avoid breaching the new regulations. While November saw an average of 1.8 million barrels per day (bpd) in Russian oil imports, representing over 35% of India's total crude mix, post-sanction flows decreased to approximately 1.27 million bpd. Analysts from Kpler predict further declines in December, estimating arrivals to be in the range of 1.0 million bpd, possibly easing to 800,000 bpd before stabilizing.India, the world's third-largest oil importer, had become Russia's largest crude buyer after Western nations imposed sanctions following the February 2022 invasion of Ukraine, leveraging steep discounts. In response to the latest sanctions, India is adapting by shifting purchases towards non-designated Russian entities, exploring more opaque trading channels, and increasing sourcing from alternative regions like the Middle East, West Africa, and the Americas. The Russian side has also demonstrated adaptability through ship-to-ship transfers, mid-voyage diversions, and complex logistics to maintain crude flows and offer increased discounts. Rosneft-backed Nayara Energy remains a notable exception, heavily reliant on Russian grades. Despite the immediate dip, the decline is largely viewed as temporary, with India's supply chains expected to reorganize to balance geopolitical considerations with economic benefits, continuing imports via indirect and less transparent routes as long as broader secondary sanctions are not enacted.
