Signs of decline: A sharp decline in Russian oil exports to India after US sanctions | Business News

As expected, the export collapse was driven by falling shipments of Rosneft and Lukoil, which account for more than half of Russia’s oil production and exports and are used to make up more than two-thirds of India’s Russian oil imports. Exports to India from Rosneft – Russia’s largest oil company – fell to 0.81 million barrels per day in the week ending October 27 from 1.41 million barrels per day in the previous week. As for Lukoil, no shipments to India were recorded in the week ending October 27, compared to 0.24 million barrels per day in the previous week.

Given that the journey time of tankers transporting Russian crude to Indian ports via the Suez Canal – the main supply route – could be up to a month, the decline in oil exports from Rosneft and Lukoil appears consistent with the November 21 deadline set by Washington to end all dealings with the two companies. Until then, Russian oil shipments at Indian ports are expected to remain strong. Deliveries remained strong in October, as this oil could have been contracted weeks before the United States imposed sanctions on Rosneft and Lukoil.

With the United States imposing sanctions on Rosneft and Lukoil, India’s imports of Russian oil are expected to decline significantly. Refiner HPCL-Mittal Energy (HMEL) has already announced the suspension of Russian oil imports, while Indian Oil Corporation, India’s largest refiner, said it will abide by all sanctions imposed by the international community, but declined to comment directly on the future of the company’s imports of Russian oil. Private sector giant RIL, which accounts for about half of India’s Russian oil imports, said it was assessing the ramifications and compliance requirements after the sanctions, and would “fully comply” with any directives on the issue from the Indian government.

The threat of secondary sanctions by the United States is why countries like India, despite their political opposition to unilateral economic sanctions, stay away from other countries and entities sanctioned by Washington. While primary sanctions — imposed on Rosneft and Lukoil in this case — essentially limit or prohibit the engagement of U.S. citizens and entities with sanctioned entities, secondary sanctions seek to limit the engagement of other countries and their entities — over which the United States has no legal control — with the targeted country or entity. Oil industry insiders said companies and banks are likely to exercise a great deal of caution to ensure they are not exposed to secondary penalties.

“Following the sanctions, we have seen Russian crude arrivals accelerating ahead of the deadline, with no refiner except Nayara (which has Rosneft in its group of promoters) expected to import from sanctioned suppliers thereafter. Russian crude flows are likely to remain at around 1.6-1.8 million barrels per day until November 21, before tapering off as refiners avoid potential OFAC-related exposure. While Indian refiners will continue to source Russian grades via unapproved brokers, it is expected “We must proceed more cautiously,” said Sumit Ritolia, senior research analyst for refining and modeling at Kpler.

The US Department of the Treasury’s Office of Foreign Assets Control administers and enforces economic and trade sanctions imposed by Washington. In October, India’s imports of Russian oil averaged 1.62 million bpd, slightly higher than 1.61 million bpd in September. Russian crude represented about 34 percent of India’s total oil imports in October.

“Russian crude oil imports in the December-January period are expected to decline significantly as refiners assess the impact and rebuild supply chains. Despite short-term disruptions, a complete halt to Russian imports remains unlikely, given attractive margins and India’s geopolitical position. Unless refiners themselves face direct sanctions or the Government of India imposes formal restrictions – both scenarios unlikely – Russian barrels will continue to flow into India, but through logistical arrangements And more complex financial and commercial ones,” Retolia said.

Given that other Russian oil exporters and intermediary traders dealing in Russian crude have not been subject to sanctions by Washington, some volumes of Russian oil could still find its way to India, although nowhere near that seen over the past three years. Russia is currently India’s largest exporter of crude oil, accounting for more than 35 percent of India’s total oil imports so far in 2025. The majority of Russian crude oil flowing into India has been imported by private sector refiners RIL and Nayara Energy.

The latest move from the Donald Trump administration – which has so far not imposed direct sanctions on major Russian oil companies even as it has pressured New Delhi to reduce oil imports from Moscow – represents a major escalation in its attempt to force the Kremlin to end the war in Ukraine. Historically, India has avoided oil imports from countries such as Iran and Venezuela, whose oil has been sanctioned by the United States, and industry observers and experts expect a similar approach to oil from Rosneft and Lukoil. Given the exposure of Indian refiners and banks to the United States – from dollar-denominated trade to access to the US financial system and markets – potential secondary sanctions could have a significant impact on them.

To compensate for the decline in direct Russian flows, Indian refiners are expected to increase purchases from West Asia, West Africa, Latin America and North America. India is the third largest consumer of crude oil in the world and depends on imports to meet about 88 percent of its needs.

“Overall, refiners are likely to expand their import baskets, with higher flows from Latin America (Brazil, Argentina, Colombia, Guyana), West Africa and the Middle East. While near-term Russian imports may decline starting from December loadings, Russian barrels will continue to reach India through intermediaries,” Retolia said.