India’s Reliance Industries – the country’s largest buyer of Russian crude, accounting for roughly half of India’s 1.7 million barrels per day of imports from Moscow – is going to recalibrate its oil purchases after US sanctioned two of Russia’s largest oil companies.
Billionaire Mukesh Ambani’s Reliance Industries Ltd, which, in December, 2024, signed a term deal with Russia’s Rosneft to import as much as 500,000 barrels per day of Russian oil for 25 years, will now have to realign its imports.
Meanwhile, industry sources said India’s public-sector units are currently assessing compliance risks, but are unlikely to immediately halt Russian crude flows as they buy almost all of their needs from traders, who’re mostly European and out of the sanctions net so far.
The company, which also buys oil from intermediaries, did not immediately respond to an email sent for comments.
The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) imposed further sanctions on Open Joint Stock Company Rosneft Oil Company (Rosneft) and Lukoil OAO (Lukoil) – two of Russia’s largest oil companies that the Trump administration accuses of helping fund the Kremlin’s “war machine” in Ukraine.
The two companies together export 3.1 million barrels of oil per day, of which Rosneft alone is responsible for 6 per cent of global and nearly half of all Russian oil production.
India became the largest purchaser of Russian crude in 2022, after Moscow invaded Ukraine, leading to sanctions imposed on it by the West. This made Russia offer steep discounts to its long-time allies, including India, which India capitalised on.
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Many oil refineries in India buy Russian crude oil – including private sector firms like Reliance Industries Ltd and Rosneft-backed Nayara Energy, as well as state-owned refiners Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL), Hindustan Petroleum Corporation Ltd (HPCL), Mangalore Refinery and Petrochemicals Ltd and HPCL-Mittal Energy Ltd (HMEL).
However, the state-owned refiners do not have any term or fixed quantity deal with either Rosneft or Lukoil, and typically buy Russian oil through tenders which see participation by oil traders, mostly European or those based in Dubai and Singapore, who had purchased oil from Russian entities.
While these traders have not been sanctioned by the US, sources said European Union sanctions had not targeted these traders either.
It’s being anticipated that some traders may shy away from picking Russian volumes in the future, but Moscow is also capable of resurrecting new ones overnight with Dubai registration, analysts opined.
Using a roundabout way, these traders can buy oil from Russian firms and sell to refiners in India and China.
“The measures by the Trump administration are ‘half-hearted’,” a source involved in the business said, adding, “For months, US President Donald Trump has resisted pressure from US lawmakers to impose energy sanctions, and even now the ones who do bulk of the trade are out of its net.”
Another source said the markets are somehow not buying into Trump’s latest sanctions.
“If sanctions were so impregnable, international oil prices would have jumped at least USD 5-10 per barrel on news of such large volumes going out of the market. Instead what we saw was just a USD 2 per barrel increase, implying the market believes not all of the oil that is exported from Russia is going anywhere.”
Nayara Energy, which operates a 20 million tonnes a year oil refinery at Vadinar in Gujarat, has already been sanctioned by the European Union. Rosneft holds a 49.13 per cent stake in Nayara Energy, which may force the Indian refiner to also recalibrate its purchases, sources said.
Kesani Enterprises Company Limited – a consortium led by Mareterra and Russian investment group United Capital Partners (UCP) – holds another 49.13 per cent stake in Nayara.
While the Indian government has so far not given any instructions to refiners on stopping or reducing Russian oil imports, Trump has been insisting that India has agreed to stop all purchases of Russian oil, claims that India has not commented upon.
The EU, meanwhile, banned import of fuels refined from Russian crude with effect from January 21 next year. Reliance, whose one of the two refineries is only-for-export, refines Russian crude into fuels like petrol and diesel, some of which is exported to the EU. MRPL also exports to the EU.
When exports stop in January, Reliance and MRPL will have to cut Russian oil purchases. Nayara has already stopped fuel exports to EU after being sanctioned.
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