India Takes Bold Step: Suspends Trade with US-Sanctioned Russian Companies and Tankers, Sources Reveal

By Nidhi Verma

NEW DELHI – Indian oil refiners have stopped trading with companies and tankers that the U.S. has sanctioned. However, a government source says that this move shouldn’t disrupt Russian crude oil supplies over the next two months.

The U.S. Treasury recently imposed sanctions on Russian oil producers like Gazprom Neft and Surgutneftegaz, along with insurers such as Ingosstrakh. These sanctions aim to cut off revenue that Russia uses to support its war in Ukraine.

Alongside targeting specific companies, the U.S. also sanctioned 183 vessels that transport Russian oil. Yet, they have allowed some energy transactions to wind down until March 12, 2024. This means that cargoes booked before January 10 will still be able to unload at Indian ports.

The source indicated that there shouldn’t be any major issues in the next couple of months. Ships currently in transit will arrive without problems. However, predicting future impacts is still uncertain. There’s speculation that Russia might offer steeper discounts on oil to comply with a $60 price cap set by the G7 nations in 2022.

Indian officials are paying close attention to these developments. If they can secure Russian crude from non-sanctioned entities at or below the price cap, it could be a favorable option. Additionally, Indian banks will require certificates of origin to confirm that transactions don’t involve sanctioned parties.

India, being the world’s third-largest oil consumer, is confident that Russia will continue to find ways to meet its needs. The Kremlin has warned that the new U.S. sanctions could disrupt global oil markets, and they are preparing to mitigate any potential fallout.

On the market front, global Brent crude prices have risen, surpassing $81, reaching levels not seen since August. Many Indian refiners are currently negotiating contracts for the future, including looking to increase purchases from Middle Eastern countries.

To adapt to these changes, oil producers from regions like the U.S., Canada, Brazil, and OPEC are expected to ramp up production to compensate for any shortages from Russia.

India is also monitoring the ramifications of the U.S. sanctions on the Vostok oil project, where Indian companies have invested interests.

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