US sanctions on Russia to impact India’s oil import

India is likely to see an impact on its crude oil imports from Russia due to the recent sanctions imposed by the United States, but disruptions will not be immediate, according to a senior government official. The official explained that oil cargoes already in transit will reach India, so there will be no immediate effect. However, the situation may change in the coming months.

“The impact will be felt after about two months,” the official said, adding that India’s worst-case scenario would be having to buy oil at market prices without the discounts it has enjoyed from Russia. “We may lose the discounts, and oil will be available at market prices—that’s the main consequence,” the official stated.

While acknowledging that the sanctions will create some challenges, the official emphasized that the full impact on the market will unfold gradually. “We’re not rushing to conclusions based on short-term fluctuations. The market is still adjusting to the situation, and it’s too early to predict the long-term effects,” the source said.

The official also pointed out that the disruption caused by the sanctions would not be immediately noticeable. “Cargoes already in transit will arrive, and there will be no immediate disruption for the next six to eight weeks,” the official explained. “This gives both producers and buyers a window of opportunity to explore alternative arrangements.”

Despite the challenges, the official expressed optimism about the availability of crude oil for India, the world’s third-largest consumer of oil. Even with the sanctions on Russian producers, the official believes that global oil supply will remain sufficient, citing new producers such as Guyana and existing ones like OPEC, the US, and Canada, which have spare capacity.

“Supply won’t be an issue. The only question is how much we pay for it. If prices rise, even with discounts, it could become uncomfortable for India. However, if prices are low, even without discounts, we should be fine,” the official said, adding that the political shift in the US could further alter the situation. “Given India’s position as a major oil consumer, I’m optimistic that the product will continue to flow to our market,” he concluded.

Russia has been India’s leading oil supplier for the past three years, offering significant discounts since the US imposed sanctions on Russia following its invasion of Ukraine in 2022. Despite international pressure, India has continued to prioritize securing oil from the cheapest available sources to meet its energy demands and keep costs affordable for the country.

The recent US sanctions, imposed on Russian oil producers Gazprom and Surgutneftegas, as well as 183 vessels carrying Russian oil, are not expected to have a significant impact on India’s oil imports. “One of the companies doesn’t supply oil to India, and the other is a smaller supplier. The sanctions will not drastically affect us,” the official noted. Additionally, the price cap on Russian oil has not changed.

In the wake of these developments, crude oil prices surged to a four-month high on January 13, reaching over USD 81 per barrel due to concerns over supply following the new sanctions on Russia.

Despite these challenges, India remains committed to securing oil to meet its growing energy needs, with sufficient supply expected from global sources.