India halts trade with Russian oil firms under US sanctions: here’s why

Indian refiners have reportedly stopped dealing with tankers and entities that have been sanctioned by the US. 

However, the country does not expect any disruption to Russian oil imports during a two-month wind-down period, Reuters reported on Monday. 

On Friday, the US Treasury had sanctioned Russian oil producing giants Gazprom Neft and Surgutneftegaz, while also imposing sanctions on insurers Ingosstrakh and Alfastrakhovanie Group. 

The US had also imposed sanctions on 183 vessels, which were used for transporting Russian crude oil, while allowing a winding down of some energy related transactions by March 12. 

Invezz had reported last week that India’s imports of Russian crude oil in December had already slumped to a 17-month low, with shipments from the Middle East and some African countries rising. 

India is also likely to ramp up imports from Iraq and Saudi Arabia in the coming months as less Russian oil is available in the market due to sanctions. 

According to Reuters, India will allow Russian oil cargoes booked before January 10 to discharge at ports in line with US sanctions. 

An official told Reuters on Monday:

Steeper discounts

The official also said that Russia could offer steeper discounts to India in order to meet the $60 per barrel cap imposed by the Group of Seven countries in 2022. 

This move is likely to make it easier for India to import from Russia, while using western tankers and insurance. 

The official further said that India would be willing to get Russian crude from non-sanctioned entities below the imposed price cap. 

Indian banks will seek certificates of origin for Russian crude oil to ensure transactions do not include sanctioned tankers or cargoes. 

India is the world’s third largest crude oil importer behind China and the US. 

Sanctions may destabilise oil markets

Earlier on Monday, Russia had said that the sanctions by the US on tankers carrying oil from the country could destabilise global oil markets and the Kremlin would try to minimise the impact as much as possible. 

According to Vortexa, India’s crude imports from Russia could remain subdued in January. 

India had been one of the biggest buyers of Russian oil since Moscow’s invasion of Ukraine in 2022. Russia had been offering steep discounts to Asian buyers such as India and China. 

Discounts to other crude oil grades made it easier for developing countries such as India to reduce their import bill. India meets over 87% of its domestic crude oil needs through imports. 

India has also been negotiating annual contracts for 2025-26 for crude shipments, and may seek higher volumes from the Middle East. 

India’s December imports

India imported around 4.46 million barrels per day of crude oil in December, up nearly 4% on a month-on-month basis, according to data from Vortexa. 

Higher imports from Iraq offset declines from Russia, the data showed. 

India’s crude oil imports from Russia declined by 13% on a month-on-month basis to just shy of 1.40 million barrels per day during December, Vortexa data showed. 

India imported around 1.1 million barrels per day of crude oil from Iraq, up nearly 50% from November, data from Vortexa showed. 

In the first seven days of January, Iraq supplied 1.53 million barrels per day of crude oil to India, the data showed. 

India purchased 494,838 barrels per day of crude oil from the UAE in December, considerably higher than the previous month. In the first week of January 2025, imports from UAE were at 160,140 barrels per day, Vortexa data showed. 

Additionally, India has also been examining the impact of the new US sanctions on Russia's Vostok oil project, in which Indian companies have a stake, according to the Reuters report.