Pivoting away from Russian oil will lead to a rise in India's import bill

US to replace Russian oil 

Indian refiners are likely to ramp up crude oil purchases from the Middle East, Latin America and the US to compensate for reduced imports from Russia, following Washington's sanctions on two major Russian producers, sources and analysts said.

The US government, on October 22, imposed sanctions on Russia's two largest crude oil producers, Rosneft and Lukoil, barring all American entities and individuals from conducting business with them. Non-US firms could also face penalties if found dealing with the sanctioned companies or their subsidiaries. The US Treasury Department said all existing transactions involving Rosneft and Lukoil must be wound down by November 21.

Russian crude flows are expected to remain in the 1.6-1.8 mbd range until November 21, but direct volumes from Rosneft and Lukoil are likely to decline thereafter, as Indian refiners seek to avoid any risk of US sanctions, said Sumit Ritolia, Lead Research Analyst (Refining and Modelling) at Kpler. Reliance, which has a 25-year term contract with Rosneft, may be the first company to do so, sources said. 

Prashant Vasisht, Senior Vice President and Co-Group Head, Corporate Ratings, Icra Limited, said pivoting away from Russian oil will lead to a rise in India's import bill.