Russia Reorganizes Oil Routes to Keep Crude Flowing to India Amid US Sanctions
Russia is actively restructuring its oil supply chains to ensure India continues to receive discounted crude despite tightening US sanctions. India remains a major buyer due to the attractive low prices of Russian oil, despite US pressure and threats of harsh tariffs. Experts indicate Russia is utilizing new intermediaries to bypass restrictions, suggesting the recent dip in imports will be temporary. While some private refiners comply with sanctions, state-run refiners are expected to resume previous purchasing levels, driven by the significant cost savings.
Russia is reconfiguring its oil supply network to sustain substantial exports of discounted crude to India, navigating increasingly stringent US sanctions. India has emerged as the world's second-largest buyer of Russian oil since the Ukraine conflict, driven by prices significantly lower than those from the Middle East, offering a $9-$10 per barrel discount. This cost-effectiveness makes Russian crude highly appealing to Indian refiners. The United States has actively pressured India to reduce its reliance on Russian oil, imposing initial 25% tariffs and threatening up to 500% tariffs, along with potential withdrawal from India-led global initiatives. Washington accuses India of indirectly funding Russia's war efforts. However, India maintains its energy policy is a sovereign issue, refusing to alter its course despite these diplomatic and economic pressures, leading to stalled trade talks. Recent US sanctions, specifically targeting major Russian exporters Rosneft and Lukoil, temporarily reduced India's Russian oil imports from 1.7 million to 1.2 million barrels a day in December. Nevertheless, industry analysts predict this impact will be short-lived, observing Russia employing new exporters as intermediaries to circumvent sanctions. The aim is to restore supply levels, particularly for state-run Indian refiners, with Russian President Vladimir Putin affirming uninterrupted shipments. The main exception is Reliance Industries, a private refiner, which ceased Russian oil purchases to comply with US and EU sanctions due to its significant European export market. The overwhelming price advantage of Russian crude continues to be a primary driver for India's sustained engagement.
