New US sanctions threaten Russian oil sales to India – Reuters

New US sanctions against Russia could affect the nation’s oil exports to India, which is the largest buyer of its seaborne crude.

Source: Reuters

Details: The sanctions will also complicate attempts by Indian state-owned refiners to secure annual supply contracts.

The sanctions target Russia's leading oil shipping line Sovcomflot, which Washington has accused of involvement in violating the G7-imposed price cap on Russian oil.

"Indian refiners are concerned the latest sanctions will create "challenges" in getting vessels for Russian oil and could drive up freight rates. That may narrow the discount for the oil, which is bought from traders and Russian companies on a delivered basis," Reuters noted.

Furthermore, Russia may have to move even more crude using layers of obfuscation to protect itself from the risk of further sanctions.

Russia became India's largest oil supplier in 2023. The South Asian country imported about 1.66 million barrels of Russian oil daily in 2023 through term contracts and spot market purchases, compared to an average of 652,000 barrels per day in 2022.

Rosneft, a Russian state-owned oil and gas company and the world’s largest oil producer among public companies, has offered a discount of US$3-3.50 per barrel compared to Dubai prices, less generous than the current deal between it and leading Indian refiner Indian Oil, which expires on 31 March, with a discount of US$8-9 over Dubai quotes for purchase and shipping costs.

However, refiners believe the discount offered is insignificant, given the uncertainty caused by the sanctions.

Background: US President Joe Biden has announced that the United States is imposing over 500 sanctions on Russia and new export restrictions on nearly 100 organisations on the eve of the second anniversary of Russia's full-scale invasion of Ukraine, and following the death of Russian opposition leader Alexei Navalny.

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