Strict enforcement of the sanctions could upend global oil markets, potentially removing 3.1 million barrels per day of Russian supply from international trade — a third of which goes to India — and sending prices soaring as refiners in India, China, Turkey, and elsewhere scramble to secure December cargoes from a thin global surplus, executives said. Supply uncertainty and rising prices are set to dominate the industry, they said.
Any entity doing business with the sanctioned firms risks secondary sanctions — a risk neither Indian refiners nor banks can afford due to their US exposure, executives noted.
The sanctions, announced by the US Department of the Treasury’s Office of Foreign Assets Control on Wednesday, mark Washington’s renewed push to pressure Moscow into a peace deal with Ukraine.
Over $1b Dividends Trapped
The sanctions come after months of failed persuasion by US President Donald Trump. “I just felt it was time. We waited a long time,” he said.
The measures also cover Rosneft’s upstream joint ventures Vankorneft and Taas-Yuryakh, where Indian state firms collectively hold 49.9% and 29.9% stakes, respectively.
Indian partners — ONGC, Oil India, BPCL, and Indian Oil — already have over $1 billion in dividends from these ventures trapped in Russia that they are unable to repatriate.
Reliance Industries shares fell 1% after an early rise on Thursday, while IOC, BPCL and HPCL closed 2–3% lower as the loss of the Russian discount (around $2 a barrel) and the need for costlier replacements weighed on refiners’ stocks.
“We can’t deal with sanctioned entities,” a refinery executive said.
EXPLORING OPTIONS
According to the sanctions, companies worldwide must complete all cargo receipts and payments by November 21. This effectively rules out fresh loadings from Rosneft or Lukoil to India, as Russian shipments typically take about a month to reach India, executives said.
Refiners will now have to cancel November and December loadings and find replacements for roughly 1 million barrels per day (mbd) of crude that Rosneft and Lukoil ship to India — about two-thirds of India’s Russian imports.
They are exploring optional volumes under West Asia term deals and spot cargoes from the US, Brazil, and elsewhere, executives said.
“It might be expensive, but we should manage — Russia accounts for only about 20% of our crude,” a state refiner executive said, adding that December imports shouldn’t be significantly affected.
“Sanctions will hurt but may not severely dent margins as oil remains in the $60s and crack spreads are attractive,” another executive noted.
The impact will be much deeper for private players Reliance Industries — which sources nearly half its crude from Russia — and Nayara Energy that depends entirely on barrels from Moscow. Reliance buys most of its Russian supplies directly from Rosneft under a term deal, while state firms mostly source through traders.
The biggest roadblock is payment. “The payments will not go through. Banks will not be ready to facilitate these transactions,” an executive said.
The dominance of the dollar, the preferred currency for oil trade, strengthens Washington’s hand. Even when refiners attempt payments in yuan or UAE dirhams, dollar conversion is typically involved, giving the US Office of Foreign Assets Control visibility and control.
State-run refiners will also be affected, as even third-party cargoes of Rosneft or Lukoil origin could face payment refusals from banks. Rosneft and Lukoil together export around 3.1 mbd of Russia’s 4.5–5 mbd total crude shipments.
Indian refiners have come to rely on discounted Russian barrels for about one-third of total crude imports, compared with almost none before the Ukraine war.