Russian oil may flow through loopholes

US President Donald Trump has announced fresh sanctions on two of Russia’s largest oil companies in a bid to stop the Ukraine war. But this is not likely to spell the end of Russian oil flows to India, a major buyer

- S DINAKAR

It might be too early to pronounce the end of the $69 billion India-Russia oil trade from Wednesday's sanctions by Washington on two of Russia's biggest oil producers and new sanctions package by the European Union on Russian oil and gas.

There is a loophole: While the US sanctioned Russian firms Rosneft and Lukoil, Russian oil itself was spared by both Washington and Brussels, experts and refining officials said, with the result that it continues totrade in the world market.

Indian refiners will break no law, domestic or international, for buying Russian oil ifthe seller is not sanctioned, three officials from two state refiners and aprivate refiner said. In other words, the sanctions regime leaves suppliers from other countries free to sell Russian oil.

There will, however, be an immediate impact on December arrivals, orders for which are placed now, aseniortrader ata state refiner warned, because there isno time for Moscow to workaround the sanctions.

Nearly 70 per cent of India’s supplies this year came from Rosneft and Lukoil, according to shipping data. After adding shipments from Surgutneftegaz, another leading Russian oil producer, the proportion in the Indian oil import basket creeps upto 78 percent. It is however, not clear how Surgutneftegaz, which was sanctioned by the US back in January, is still supplying India.

Tatiana Mitrova, global fellow at the Centre on Global Energy Policy, Columbia University, said ina LinkedIn post that whether these sanctions area turning point or just the latest ina long series of geopolitical moves will depend on howseriously enforcement follows the headlines.