US sanctions on Russian oil firms: Here's how Indian companies will be impacted

US sanctions imposed on two of Russiarsquos largest oil companies are expected to affect Reliance Industriesrsquo direct crude imports from Russia while public sector refiners in India are likely to continue purchasing Russian oil through intermediary traders for now news agency PTI reportedIndustry sources said that while staterun refiners are reviewing compliance risks they are unlikely to immediately stop Russian crude imports as they procure almost all their Russian oil from traders primarily European who are not targeted by the sanctionsReliance Industries Ltd owned by billionaire Mukesh Ambani is Indiarsquos largest buyer of Russian crude accounting for nearly half of the countryrsquos 17 million barrels per day imports from Moscow PTI reported The company may need to adjust its imports as it purchases crude directly from Russiarsquos Rosneft which has now been sanctioned sources addedIn December 2024 Reliance signed a longterm deal with Rosneft to import up to 5 lakh barrels per day of Russian crude for 25 years It also buys oil from intermediaries The company has not made a statement yet on the issueThe US Department of the Treasuryrsquos Office of Foreign Assets Control OFAC imposed fresh sanctions on Rosneft and Lukoil mdash Russiarsquos two biggest oil firms accused by the Trump administration of funding the Kremlinrsquos war machine in Ukraine Together these companies export 31 million barrels of oil daily Rosneft alone accounts for 6 per cent of global oil production and nearly half of Russiarsquos outputSince Russiarsquos invasion of Ukraine in 2022 India has emerged as the largest buyer of discounted Russian crude following the withdrawal of many Western buyersBesides Reliance and Rosneftbacked Nayara Energy public sector refiners such as Indian Oil Corporation IOC Bharat Petroleum Corporation Ltd BPCL Hindustan Petroleum Corporation Ltd HPCL Mangalore Refinery and Petrochemicals Ltd and HPCLMittal Energy Ltd HMEL also import Russian crudeUnlike Reliance stateowned refiners do not have fixedterm contracts with Rosneft or Lukoil PTI reported They buy Russian oil through tenders where traders mostly European or based in Dubai and Singapore participate These traders have not been sanctioned by the US or the European UnionSources noted that even if some traders avoid Russian oil volumes Russia could quickly establish new traders with Dubai registration to continue sales to Indian and Chinese refinersA business insider called the sanctions halfhearted explaining that the Trump administration resisted stronger energy sanctions despite pressure from US lawmakers The insider also said the market did not react strongly to the sanctions with only a small increase in oil prices indicating skepticism about the sanctionsrsquo effectivenessNayara Energy where Rosneft holds a 4913 per cent stake is another major private buyer of Russian oil Nayara which runs a 20 million tonnes per year refinery at Vadinar Gujarat has already been sanctioned by the EU and may have to adjust its purchases sources said Nayara did not respond to PTIrsquos request for commentsKesani Enterprises Company Limited mdash a consortium including Mareterra and Russian Group United Capital Partners mdash holds the other 4913 per cent stake in NayaraSources said the Indian government has yet to instruct refiners to stop or reduce Russian crude importsThey added that US President Trumprsquos recent comments about India agreeing to halt all Russian oil purchases were likely linked to the EUrsquos ban on imports of fuels refined from Russian crude effective January 21 next year Reliance and MRPL export refined fuels such as petrol and diesel to the EU and will have to curb Russian crude imports if they want to maintain these exports Nayara has already stopped fuel exports to the EU following sanctionsWith three major buyers recalibrating purchases Russian oil flows to India will likely reduce from January mdash a point Trump may be using to bolster his stanceWith PTI inputs