US sanctions start to impact supplies from Russia
NEW DELHI: The US sanctions on Russian oil sector have started to show impact on India’s near-term oil flows with state-owned Bharat Petroleum Corporation Ltd (BPCL) saying not enough cargoes are available from Russia for March 2024.
BPCL Director (Finance) Vetsa Ramakrishna Gupta stated during an analyst call on Thursday that BPCL had booked Russian crude for January and February, but for March, “We are not getting sufficient cargoes.”
He also noted that Russian oil’s share in the company’s overall crude oil basket has decreased to 20% in March from 31% in the October-December quarter.
At the start of the current financial year in April 2024, Russian oil accounted for 34-35% of BPCL’s processed oil. This significant share was primarily due to Russian crude being available at a discount to other internationally traded oil, resulting from the price cap and European country’s shunning purchases from Moscow. Gupta mentioned that the discounts on Russian oil have narrowed to $3-3.2 per barrel from $3.5-4 at the start of the current financial year and $8.5 in the 2023-24 financial year.
Gupta assured that there is enough oil available in the market and the company would explore alternative sources such as the Middle East to replace the lost volumes from Russia. Russia accounted for just 0.2% of India’s total oil imports in the year ending March 31, 2022.
However, India became the second-largest buyer of Russian crude oil after Moscow invaded Ukraine in February 2022, with purchases rising to almost 40% of the country’s total oil purchases.
The US imposed sweeping sanctions targeting the Russian energy sector on January 10, including sanctions on oil producers Gazprom Neft and Surgutneftegas and curbs on various entities involved in Russian energy exports.
This month India has decided to avoid deliveries made by tankers sanctioned by the US in the latest round.