Sanctions force refiner retreat on Russian oil

The US late on Wednesday announced sanctions on Russian oil giants Rosneft and Lukoil, the Trump administration's strongest bid yet to pressure President Vladimir Putin into negotiating an end to the war in Ukraine, a move that could force Indian refiners to sharply reduce their purchases.

- Rajeev Jayaswal and Shashank Mattoo

The sanctions mean that apart from blocking the companies’ assets inside the US, they will largely be cut off from the global monetary exchange underpinned by the American dollar. The US Treasury department warned that transactions with these companies risks “the imposition of secondary sanctions on participating foreign financial institutions”.

“Now is the time to stop the killing and for an immediate ceasefire,” treasury secretary Scott Bessent said in a statement announcing the sanctions. He added that the Treasury is prepared to take further action if necessary.

Brent crude surged more than 5% to trade above $65 a barrel on Thursday, after having risen 2% the day before, following the US announcement.

The move will force refineries, in India as well as China — the world’s two biggest purchasers of Russian crude — to sharply curtail imports because the payments for consignments are mainly made in US dollars.

According to people aware of the matter, private and government-controlled refiners in India have contingency measures in place and are moving to reduce or cease imports of Russian oil including halting purchases under large long-term deals.

Reliance Industries, the top Indian buyer of Russian crude, will halt purchases under its long-term deal with Rosneft to import nearly 500,000 barrels per day, news agency Reuters quoted unnamed sources as saying.

“Recalibration of Russian oil imports is ongoing and Reliance will be fully aligned to GOI (Government of India) guidelines,” a Reliance spokesman said in response to a query on whether the company plans to cut its crude imports from Russia.

Indian state refiners including Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp are also reviewing their Russian oil trade documents and will wait government guidance, two people aware of the matter said, adding that there had been no specific directions yet but contingency plans were ready.