According to a report by the news agency Reuters, the recent sanctions imposed by the United States on Moscow announced on Friday, February 23, 2024, are anticipated to disrupt the flow of Russian oil to India, a significant consumer of such crude via maritime routes since the inception of sanctions.
The latest round of sanctions, coinciding with the second anniversary of Moscow's Ukraine invasion and in response to the death of opposition figure Alexei Navalny, specifically targets Sovcomflot, a prominent Russian tanker company, along with 14 associated crude oil vessels. The U.S. government alleges their involvement in breaching the G7's price cap on Russian oil.
Indian refiners, heavily reliant on Russian crude imports, express concerns that these sanctions might impede their ability to secure vessels for transporting Russian oil, potentially leading to escalated freight rates. This could consequently diminish the customary discounts typically associated with Russian oil procurement.
Industry insiders cited in the report underscore apprehensions that Russia may increasingly turn to trading firms to mitigate the risk of further sanctions, intensifying uncertainties in the market.
India's dependence on Russian oil has surged in recent times, with Russia surpassing other suppliers to become India's primary source of oil in 2023. This transition was partly spurred by European embargoes on Russian oil imports.
Indian state refiners, including Indian Oil Corp, Bharat Petroleum Corp, and Hindustan Petroleum Corp, are currently engaged in negotiations with Russian major Rosneft to secure an annual supply agreement, targeting a collective volume of up to 400,000 barrels per day (bpd) of Russian oil, predominantly Urals grade, for the forthcoming fiscal year.
