All Indian refineries now refuse to accept Russian oil transported in PJSC Sovcomflot tankers due to US sanctions, further complicating trade that has flourished since the invasion of Ukraine two years ago.
Private and state-owned processors, including the largest – Indian Oil Corp. – stopped accepting cargo if it was on Sovcomflot tankers. Refineries are scrutinizing the ownership of each ship to ensure they are not affiliated with the company or other sanctioned groups.
The broader reaction follows a similar move by India’s largest private refiner, Reliance Industries Ltd., disclosed earlier this week. The heightened scrutiny on the oil giant appears to have also swept up other oil tankers carrying Russian oil, with two vessels waiting for several weeks off the coast of South Asia with no indication of when they will unload.
Last month, the US Treasury’s Office of Foreign Assets Control designated Sovcomflot and identified 14 oil tankers in which the state-controlled company has an interest. This came on top of broader measures already imposed on non-Sovcomflot ships and Russian-friendly companies since October for violations of a Group of Seven ceiling on the price of Russian oil.
India has been a major buyer of Russian oil since the invasion of Ukraine, but stricter enforcement of U.S. sanctions has disrupted trade and prompted refiners to seek more expensive oil from other regions such as the U.S. Sovcomflot said this week that the penalties were putting pressure on its operations.
The Sovcomflot issue means there are fewer tankers to deliver Russian oil, which has led to discounts for the country’s crude to offset higher freight costs.
The discount for comparable supplies exploded to $30 per barrel after the war, but this has declined and is currently around $2 to $4 for Indian buyers. The South Asian country is still expected to buy large volumes of Russian oil this month, with Kpler estimating imports of 1.8 million barrels per day – the highest since July.
About 1.5 million barrels of Urals oil have so far been shipped on Sovcomflot vessels in March, down from 4.4 million barrels in January and 4.7 million barrels in February, according to shipping data compiled by Bloomberg.
2024-03-22 23:49:22