Indian refiners wary of buying Russian oil as EU sanctions loom

by Abbas Adil

Indian refiners are wary of buying Russia crude oil loading after December 5 when European Union sanctions take effect, pending clarity on the proposed G7 price cap mechanism, according to sources familiar with the refiners’ crude purchase plans.

Chinese refiners have already begun slowing down Russian oil imports from next month.

The Asian giants, who are two of the world’s top three importers, had become Russia’s biggest customers after the West shunned Russian oil after the outbreak of war in Ukraine.

No clarity on G7 price-cap mechanism

India and China — two of the world’s top three importers — had become Russia’s biggest customers after the West shunned Russian oil after the outbreak of war in Ukraine

Reduced buying by both of them would leave Russia chasing alternative customers, potentially depressing prices even if those new buyers are unlikely to join a plan by rich nations in the Group of Seven (G7) to cap Russian oil prices.

Reliance Industries Ltd, operator of the world’s biggest refining complex and a major customer for Russia, has not placed orders yet for Russian cargoes loading after December 5, two sources familiar the refiner’s purchase plans said.

Neither has state-run Bharat Petroleum Corp, they said. The Indian companies did not respond to an email seeking comments. According to the sources, Reliance is cautious about reactions from foreign banks given its exposure to the western financial system and overseas sales of refined products.

“There are too many uncertainties attached to the cap mechanism. We don’t know what the payment mechanism could be and what could be the cap level,” said a source at one of the state refiners.

Still, Indian Oil Corporation, the country’s top refiner, has placed orders for Russian cargoes, including for loading some parcels beyond December 5, under term and spot deals, said one of the sources.

In contrast, private refiner Nayara Energy, majority owned by Russian entities, plans to continue Russian oil imports, sources aware of its crude purchases said.

You may also like

Leave a Comment

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

The reCAPTCHA verification period has expired. Please reload the page.