India stares at $2.7 bn hit as US sanctions Russian oil cos

Sanctions on Rosneft, Lukoil are likely to force Indian refiners to buy oil from other sources

- Rituraj Baruah

Russia has been the largest supplier of crude oil to India since FY23, accounting for around 35% of the country's total imported crude.

(REUTERS)

US sanctions on Rosneft PJSC and Lukoil PJSC, the two biggest suppliers of Russian oil, are likely to force Indian refiners to buy from West Asian and other sources that do not offer discounts, increasing the country's import bill, analysts said.

"The sanctions by the US on certain Russian crude oil producers are likely to impact the purchases by India as these suppliers accounted for about 60% of the volumes purchased," said Prashant Vasisht, senior vice president and co-group head, corporate ratings, Icra Ltd. "While India can substitute the purchases from Russia with suppliers from the Middle East and other geographies, the import bill for crude oil would increase."

Vasisht sees the replacement of Russian oil by market-priced crude increasing the country's oil import bill by 2%. Given India's crude imports worth $137 billion in FY25, that would amount to an increase of $2.7 billion.