By Rakesh Sharma and Yongchang Chin
Indian refiners, currently eyeing deliveries for the month of November, could cut back purchases of crude shipments from Russia after a sweeping US sanctions bill was signed into law last week, raising the threat of fresh punitive tariffs.
The world’s third-biggest crude buyer bought more than half of its imports from Russia in some recent months, in an effort to counter high prices and continued disruption in flows from the West Asia. Over the past few days, however, the top processors have begun to look seriously for alternative cargoes, according to people involved in the discussions. They asked not to be named as the conversations are not public.
The new US law empowers President Donald Trump to impose tariffs on countries that purchase Russian crude — a list that includes India, the top buyer of the country’s seaborne oil and an economy was already been on the receiving end of similar levies last year. These were later lifted.
Imports from Russia have already eased and may average about 1.9 million barrels a day in September — more than 35% of the total and the lowest since April, according to Kpler.
But it will not be easy to replace Russia’s cargoes, given the volume is far larger than, say, Venezuela or Iran, and prices are high. Russian Urals delivered to India cost about $133 a barrel at the end of last week, according to Argus Media, while West Asiaern grades such as Oman and Murban were several dollars more expensive.
With Persian Gulf exporters struggling to restore flows through the Strait of Hormuz, global crude markets are squeezed. Meanwhile, India needs more oil as a new refinery in Rajasthan and expansions at existing plants push purchases toward a record 5.4 million barrels a day.
Talks for Russian crude for November delivery should typically start in the final week of this month, putting the next buying cycle squarely inside the period of uncertainty.
India will be watching whether Washington applies the measures to all major Russian energy buyers, including China, the people said. The law allows the Trump administration to impose tariffs within 30 days on goods from major buyers of Russian energy, with rates potentially reaching 100% — potentially placing the decision on whether to take the risk firmly in the government’s hands.
India has repeatedly adjusted its Russian oil purchases over more than a year, as Washington tightened or eased pressure on the trade. Even so, New Delhi has said its purchasing decisions are driven primarily by the need to secure affordable energy for its 1.4 billion people.
“India should continue to buy crude from Russia as long as it is competitive,” said Ajay Srivastava, founder of the New Delhi-based Global Trade Research Initiative. “India should ignore the US tariff threats as there is no end to these. US may soon invent more ways to impose additional tariffs.”
