US President Donald Trump had banned two big oil companies of Russia. So that Russian oil supply can be stopped. But this ban seems to be taking a toll on the friendship between India and Russia. According to sources, India’s Russian oil imports are expected to exceed 1 million barrels per day in December, contrary to expectations of a sharp decline. Refiners have started buying oil from companies which are not affected by the US ban. Relations between the two countries remain strong despite the pressure of Western sanctions following the meeting between Russian President Vladimir Putin and Indian Prime Minister Narendra Modi earlier this month. At that time, both the leaders had said that their cooperation would continue.
How much can be imported?
India – the world’s third-largest crude oil importer – imported 1.7 million barrels per day of Russian oil in November, up 3.4 percent from October, according to data from trade sources. After this, America imposed sanctions on Russia’s top oil companies. After which there was a possibility of a huge decline in imports, because some refiners had either reduced or stopped buying oil altogether. According to a trade source, according to LSEG data, imports are likely to exceed 12 lakh barrels per day in December, which may increase to an average of 15 lakh barrels per day by the end of the month.
These companies are coming forward
India’s imports from Russia increased in December as buyers raced to finalize deals before the November 21 deadline set by Washington to complete transactions with Rosneft and Lukoil. According to LSEG data, many such cargoes have recently arrived at Indian ports. According to trade sources, imports in January may remain around the level of December. In fact, those Russian companies are increasing their cargo, on which there are no restrictions. However, refining sources estimate the volume in January to be less than 1 million barrels per day as Reliance Industries has stopped purchases. According to LSEG data, Reliance is receiving at least 10 Russian oil cargoes this month.
Government companies are making purchases
According to two sources, top refiner Indian Oil Corp is purchasing Russian oil at pre-ban levels. Sources said Bharat Petroleum has increased its purchases in January to at least six cargoes from two cargoes in December, while Hindustan Petroleum is in talks for January loading. Private refiner Nayara Energy, which is majority owned by Russian companies including Rosneft, continues to buy only Russian oil after other suppliers pulled out following sanctions imposed by the European Union and Britain. Reliance and HPCL Mittal Energy have said that they are stopping the purchase of Russian oil. Sources said they, along with Mangalore Refinery and Petrochemicals, are not making Russian purchases for January.
Russia’s biggest buyer
After the start of the Russia-Ukraine war, western countries imposed many types of bans on Russia. After which India became the largest buyer of Russian crude oil through sea route. But this purchase became an obstacle in trade talks with America. There is a reason for this also. President Donald Trump doubled the import duty on Indian goods to 50 percent. According to industry sources, to facilitate exports, Russian producers are using diversion into the domestic market. Now those Russian companies are coming forward for supply, on which there is no restriction.
These Russian companies can increase production
Prashant Vashishtha, vice president of ICRA, a subsidiary of Moody’s, said that Russian companies which are not banned can increase their production and transfer supplies to export markets. So that the banned barrels can meet the local demand of Russia. Sources said that Indian refiners are finding January prices quite attractive, which are about $ 6 per barrel lower than Brent crude oil. According to data received from trade sources, the purchase of oil from Russia by Indian refiners reached the highest level of about 2 million barrels per day in June.
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