India has announced plans to prohibit the unloading of Russian oil tankers subjected to US sanctions, marking another instance of Washington’s measures influencing the global oil market. The decision reflects India’s intent to align with international sanctions while seeking to safeguard its energy security through alternative supply arrangements.
The move follows sanctions imposed by the US Treasury’s Office of Foreign Assets Control (OFAC) on Russian energy firms, insurance providers, and vessels involved in transporting oil. A senior Indian government official, speaking anonymously due to the sensitivity of the issue, stated that tankers under sanctions would be denied access to Indian ports unless contracted before 10 January and able to complete unloading by 12 March.
Broader Market Implications
The sanctions, introduced on 10 January, targeted major Russian oil companies Gazprom Neft and Surgutneftegaz, alongside maritime insurance providers Ingosstrakh and AlfaStrakhovanie. Additionally, 183 vessels, identified as part of a “shadow fleet” used for exporting Russian energy, were added to OFAC’s blacklist.
India, the world’s third-largest oil importer, has relied heavily on discounted Russian crude since the onset of the Ukraine conflict. However, the official underscored that India has sufficient alternatives to mitigate any potential disruptions, highlighting the capacity of OPEC nations and non-OPEC suppliers like the US, Canada, Brazil, and Guyana to meet global demand.
“Oil supply is not a concern,” the official stated. “OPEC has 3 million barrels per day in spare capacity, and other producers can easily add volumes.”
Adjusting Supply Chains
Indian refiners are proactively negotiating long-term agreements with Middle Eastern suppliers to secure oil supplies. Depending on market dynamics, refiners may also consider additional spot purchases to bridge any shortfalls caused by sanctions.
However, the pivot from discounted Russian crude may lead to higher costs for Indian refiners. “If supplies become constrained, refiners may lose the price advantage they previously enjoyed with Russian oil,” the official noted.
India’s banking sector is also tightening compliance measures, requiring certificates of origin for oil shipments to ensure they are not sourced from sanctioned entities. This step underscores India’s commitment to adhering to international sanctions while avoiding inadvertent violations.
Russian Oil Shipments Face Challenges
The immediate impact of US sanctions has already been felt. Reports indicate that three tankers carrying over 2 million barrels of Russian oil are stranded near eastern China, unable to offload. These delays highlight the broader logistical hurdles Russia faces in circumventing sanctions and maintaining its oil exports.
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