‘March supplies may be impacted’
New Delhi: The wide-ranging sanctions imposed by the US on the Russian oil sector have started to dent near-term oil flows to India with state-owned Bharat Petroleum Corporation Ltd (BPCL) saying not enough cargoes are available for March.
The US on January 10 issued sweeping sanctions targeting the Russian energy sector. The measures include sanctions on Russian oil producers Gazprom Neft and Surgutneftegas, the blacklisting of 183 vessels involved in Russian energy exports, and curbs on dozens of oil traders, oilfield service providers, tanker owners and managers, insurance companies and energy officials.
The sanctions were announced at a time when Indian refiners had started to negotiate for March cargoes.
BPCL Director (Finance) Vetsa Ramakrishna Gupta told in an analyst call on Thursday that Russian oil had been booked for January and February in the previous two months but for March “we are not getting sufficient cargoes”.
The company saw Russian oil in the overall basket of crude oil it processes into fuels like petrol and diesel, falling to 20 per cent in March from 31 per cent in the October-December quarter, he said.
Russian oil made up for 34-35 per cent of all oil that BPCL processed at the start of the current financial year in April 2024.
He said there is enough oil available in the market and the company would look at alternatives such as the Middle East to replace the lost volumes from Russia.
Russia made up for just 0.2 per cent of all oil imported by India in the year ended on March 31, 2022. India, however, became the second biggest buyer of Russian crude oil since Moscow invaded Ukraine in February 2022, with purchases rising to almost 40 per cent of the country’s total oil purchases.
The rise was primarily because Russian crude oil was available at a discount to other internationally traded oil due to the price cap and the European nations shunning purchases from Moscow.
In 2024, Russian crude imports to India averaged 1.7 million barrels per day, making the OPEC+ producer its largest supplier.
Gupta said the discounts on Russian oil have shrunk to $3-3.2 per barrel from $3.5-4 at the start of the fiscal and $8.5 in fiscal year 2023-24.
This month, India has decided to shun deliveries made by tankers that have been sanctioned by the US in the latest round.
Russia used these tankers to ship oil to countries like India and China after the Group of Seven (G7) countries in 2022 imposed a $60 a barrel price cap on exports by the Kremlin. This cap, introduced to limit Moscow’s revenues to fund its war in Ukraine, meant that Western shipping and insurance services were not available for any oil cargo that was priced more than $60 per barrel.
To circumvent that, Russia used the so-called shadow fleet, insured by its own companies. This fleet has now been sanctioned.
There is a wind-down period until March 12, which will allow for existing contracts to finish.
“For the first two months, there will be no disruption. Within two months we will probably see new arrangements emerging in terms of oil coming to India,” a senior government source said.
