By Nidhi Verma
Latest Update: U.S. Deadline for Russian Oil Discharge Clarified – Impact on India’s Oil Imports
NEW DELHI (Reuters) – The United States has provided clarity to India regarding the deadline for tankers loaded with Russian oil to discharge by Feb. 27 under the latest sanctions targeting Moscow’s oil revenue, India’s oil secretary Pankaj Jain informed reporters at an event.
This month, Washington imposed extensive sanctions on Russian producers and tankers, leading to disruptions in the supply from the world’s No. 2 oil producer and tightening availability of ships.
"OFAC (the U.S. Office of Foreign Assets Control) provided a round of clarification. They formally stated that Feb. 27 is the deadline," Jain mentioned in response to queries about the final date for unloading oil from sanctioned vessels.
He also mentioned that the deadline for completing financial transactions is March 12.
India abides by United Nations sanctions rather than those imposed by individual countries. However, concerns about potential secondary sanctions by the United States pose operational hurdles in procuring Russian oil due to significant exposure of Indian banks and companies to the U.S. financial system.
India emerged as the leading buyer of discounted Russian sea-borne oil after Western nations imposed sanctions on Moscow and reduced their energy purchases in response to Russia’s invasion of Ukraine.
Jain emphasized that India will continue purchasing Russian oil if it is priced below the $60 per barrel cap established by Western nations and is sold without the involvement of sanctioned Russian entities and vessels.
Before the Ukraine war, Russian oil accounted for about 0.2% of India’s total crude imports. However, it now makes up more than a third of Indian oil imports.
Indian state refiners are facing challenges in securing Russian oil for March deliveries as traders have halted offering cargoes following the Jan. 10 sanctions imposed by Washington.
Puri stated that despite cutbacks by major producers, there is no shortage of oil in the market as countries like Guyana, Brazil, Canada, and Suriname are ramping up output.
"If Russian oil is available at attractive discounts, we will purchase it. Otherwise, we will explore other options," he added.
Furthermore, Puri mentioned that Indian oil refiners are considering establishing three refineries with a capacity of 400,000 barrels per day (bpd) each instead of a single 1.2 million bpd refinery in western Maharashtra state due to challenges in acquiring land.
Analysis:
The article discusses the impact of the latest U.S. sanctions on Russian oil on India’s oil imports. It highlights the deadline for tankers loaded with Russian oil to discharge, the challenges faced by Indian state refiners in securing Russian oil, and the potential shift in procurement strategies. The article also mentions the significant increase in Russian oil imports by India and the considerations for setting up multiple refineries. Overall, the sanctions have disrupted the global oil market and are affecting India’s energy procurement strategies.