India’s major oil companies, Bharat Petroleum Corp. and Indian Oil Corp., have increased their purchases of Russian crude oil sourced from non-sanctioned entities. Reports indicate that Bharat Petroleum has secured a shipment of 2 million barrels of Urals crude set for delivery in January. This order comes from companies other than Rosneft and Lukoil, which have faced significant restrictions due to recent U.S. sanctions. The deal was reported by Reuters, citing unnamed trader sources, and noted that the price for this cargo included a discount of $6-$7 compared to Brent crude prices.
As of now, Brent is trading at just above $63 per barrel, while Urals is priced at over $54 per barrel. The sanctions imposed on November 21, 2023, specifically targeted Rosneft and Lukoil, which previously accounted for approximately half of Russia’s total oil exports, around 2 million barrels daily. Since the sanctions took effect, both importers and exporters have been actively seeking alternatives to navigate these restrictions.
Since the sanctions were enacted, data from Goldman Sachs reveals that oil exports from Rosneft and Lukoil have decreased by around 1 million barrels daily. In contrast, crude oil shipments from non-sanctioned Russian companies have surged, increasing by half a million barrels daily. This shift highlights the adaptability of the oil market amid changing regulatory landscapes.
In the lead-up to the sanctions, reports indicated a decline in new orders from Indian refiners. Despite this, data from Kpler showed that Indian imports of Russian oil are on track to reach their highest levels since July, with estimates of 1.855 million barrels daily in November, compared to 1.48 million barrels daily in October.
Looking ahead, one trader suggested that the supply of Russian oil is expected to remain robust in November. Many refineries are reportedly aiming to stock up before the U.S. sanctions deadline. Additionally, a forthcoming European Union regulation, set to take effect in 2026, will require oil products destined for EU markets to be produced from non-Russian oil, further influencing market dynamics.
As the global oil market adjusts to these sanctions, India’s strategic moves to source crude from non-sanctioned companies exemplify the ongoing complexities within international energy trade. The evolving landscape indicates a potential shift in suppliers and pricing structures as countries navigate the implications of geopolitical decisions.
