Russia is using its diplomatic and financial muscle to circumvent US sanctions on crude oil imports from Russia, according to industry analysts. The strategy involves reorganizing its supply chain to enable India, currently the world's second-largest buyer of Russian crude oil, to continue importing large quantities at discounted rates.
The move comes as tensions between the United States and India have escalated over the past few months, with US President Donald Trump attempting to pressure India into reducing its reliance on cheap Russian oil. The US has imposed punitive tariffs on Indian imports, including a 25% tax on crude oil, but India has refused to back down.
Despite the initial impact of US sanctions, which saw a drop in India's imports of Russian oil from an average of 1.7 million barrels per day to around 1.2 million barrels per day in December, industry experts argue that these measures are unlikely to stop Indian refiners from purchasing Russian crude in the long term.
Russia has already begun identifying new suppliers, which will allow refineries like India's to continue importing cheap oil without being subject to US sanctions. These new players are likely acting as shadow middlemen between Russian oil giants and refineries in countries such as India.
According to analysts, it is only a matter of time before the full supply chain is reorganized, with most barrels being supplied by companies that are not Rosneft or Lukoil, Russia's two largest oil exporters. The discounts on Russian crude have dropped even further since the US sanctions, making them $9 or $10 per barrel cheaper than oil from countries such as Saudi Arabia or Iraq.
India's state-owned refineries are likely to continue purchasing Russian oil due to its low price, which is hard for the country to resist. In fact, analysts believe that imports of Russian crude by India's public sector will soon return to pre-sanctions levels.
However, the Indian private sector, led by Reliance Industries, has taken a different approach. The company publicly declared it would no longer import Russian crude into its Jamnagar refinery and has maintained an "impeccable record" of abiding by sanctions.
While this decision may have been driven in part by EU sanctions preventing Russian-origin oil processed in a third country from being allowed into the bloc, analysts believe that Trump's recent actions in Venezuela could present a new opportunity for Reliance to resume purchases of Venezuelan oil.
The move comes as tensions between the United States and India have escalated over the past few months, with US President Donald Trump attempting to pressure India into reducing its reliance on cheap Russian oil. The US has imposed punitive tariffs on Indian imports, including a 25% tax on crude oil, but India has refused to back down.
Despite the initial impact of US sanctions, which saw a drop in India's imports of Russian oil from an average of 1.7 million barrels per day to around 1.2 million barrels per day in December, industry experts argue that these measures are unlikely to stop Indian refiners from purchasing Russian crude in the long term.
Russia has already begun identifying new suppliers, which will allow refineries like India's to continue importing cheap oil without being subject to US sanctions. These new players are likely acting as shadow middlemen between Russian oil giants and refineries in countries such as India.
According to analysts, it is only a matter of time before the full supply chain is reorganized, with most barrels being supplied by companies that are not Rosneft or Lukoil, Russia's two largest oil exporters. The discounts on Russian crude have dropped even further since the US sanctions, making them $9 or $10 per barrel cheaper than oil from countries such as Saudi Arabia or Iraq.
India's state-owned refineries are likely to continue purchasing Russian oil due to its low price, which is hard for the country to resist. In fact, analysts believe that imports of Russian crude by India's public sector will soon return to pre-sanctions levels.
However, the Indian private sector, led by Reliance Industries, has taken a different approach. The company publicly declared it would no longer import Russian crude into its Jamnagar refinery and has maintained an "impeccable record" of abiding by sanctions.
While this decision may have been driven in part by EU sanctions preventing Russian-origin oil processed in a third country from being allowed into the bloc, analysts believe that Trump's recent actions in Venezuela could present a new opportunity for Reliance to resume purchases of Venezuelan oil.
. I mean, they're basically using India as a loophole by finding new suppliers and shadow middlemen 
. It's like, you'd think that would be a big deal, but not for India or Russia apparently 
.
. I can see why Indian refiners are gonna keep buying Russian oil, it's just too cheap to resist 
. They're not playing along with the sanctions and that's admirable in a way 
. And now they might even be looking at Venezuelan oil as an option? That's some clever business moves 
.
. They're getting a good deal on oil, but at what cost? We don't know who these new shadow middlemen are or what their true motives are... it's like a game of poker, and we're all just spectators watching from the sidelines 
. Mark my words, this is just the beginning of something bigger... 
. INDIA'S PUBLIC SECTOR REFINERIES ARE JUST GOING TO KEEP BUYING FROM RUSSIA BECAUSE IT'S CHEAPER, AND THE PRIVATE SECTOR IS FOLLOWING TRUMP'S LEAD BY CUTTING TIES WITH RUSSIA TOO 
. ANYWAY, I GUESS WE'LL JUST HAVE TO WAIT AND SEE HOW THIS ALL PLAYS OUT ON THE GLOBAL OIL MARKET 
. India's just going to keep buying Russian oil no matter what 
. Trump's trying to squeeze India, but they're not biting 
.