The U.S. sanctions on the top Russian oil firms are reverberating through markets with Russia’s main crude buyers as India’s Reliance Industries will stop importing crude under a long-term deal with the now-sanctioned Russian oil giant Rosneft, sources with direct knowledge of the plans told Reuters on Thursday. 

Reliance, India’s top private refiner which operates the world’s biggest refinery complex at Jamnagar with 1.4 million barrels per day (bpd) of processing capacity, has a long-term deal with Rosneft to buy almost 500,000 bpd. Reliance was India’s single biggest buyer of Russian crude, until now. 

However, the U.S. sanctions on Wednesday, the harshest move so far against Russia from the Trump Administration, designated the two biggest Russian oil companies, Rosneft and Lukoil, and a number of their subsidiaries. 

Reliance will “recalibrate” its imports to align them to Indian government guidelines, sources familiar with the company told the Financial Times on Thursday.  

Reliance typically does not import crude from sanctioned entities and is unlikely to risk secondary U.S. sanctions by continuing imports from Rosneft, as the Indian conglomerate is a listed entity with access to the U.S. banking system, the sources told FT.

The fresh U.S. sanctions on Russia’s oil industry, the first direct hit at the Kremlin’s revenues of the Trump Administration frustrated by a lack of progress toward a ceasefire in Ukraine, are a major shock to Indian refiners, and to the oil market as a whole. 

Oil prices jumped by 5% early on Thursday, with WTI moving above $60 per barrel and Brent topping $65 a barrel, as the market fears a slump in Russian oil supply and a period of adjustment for Indian refiners, whose imports from Russia account for a third of all Indian crude purchases.  

The flow of Russian crude oil to Indian refiners could drop precipitously following the U.S. sanctions, refiners and analysts say. 

Source: Oilprice.com

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