A new U.S. sanctions package against Russia may threaten Russian oil exports to India, a major source of funding for its invasion of Ukraine, Reuters reported on Feb. 28.
In the two years since Russia launched its full-scale invasion, the share of Russia’s oil in India’s total imports went from 2% to 10%. India is using Russian oil to fuel its development, even refining some and selling it back to the West.
U.S. President Joe Biden announced on Feb. 23 an additional package of sanctions against Russia ahead of the second anniversary of the full-scale invasion and in relation to the death of Alexei Navalny.
The sanctions targeted Russia's largest shipping company, Sovcomflot, for violating the Group of Seven's (G7) price cap on Russian oil.
Towards the end of 2023, G7 countries vowed to step up enforcement of the price cap, first implemented in December 2022, after reports emerged that Russia has continued to ship out much of its crude above $60 per barrel by using a "ghost fleet" of mostly uninsured tankers.
The new sanctions may "complicate efforts by Indian state refiners to secure annual supply deals," Reuters said, citing three unnamed industry sources.
Indian state refiners are in talks with Russian oil giant Rosneft to secure an annual deal of up to 400,000 barrels per day, but the deal depends on what Russia offers in terms of payments and discounts, Reuters said.
Indian refiners believe that there will be challenges in procuring oil tankers due to the sanctions on Sovcomflot, which "could drive up freight rates" and narrow the discount for oil, according to Reuters.
"India rarely bought Russian oil before 2022 due to high freight costs," but Russia has since become India's top oil supplier, Reuters said.
India's Foreign Minister Subrahmanyam Jaishankar visited Moscow in December and said that Indo-Russia ties are "very strong."
A Pew poll conducted in August 2023 found that 57% of Indians had a positive view of Russia, and another 59% had "confidence in Russian (President) Vladimir Putin."
When asked about economic ties, 71% of Indians said that "maintaining access to Russia's oil and gas reserves is more important than being tough with Russia on Ukraine."
Igor Kossov
