US sanctions on Rosneft, Lukoil: New entrants step in to supply crude to India, Pg15

Key Highlights:

• US sanctions on Rosneft and Lukoil led to a decrease in their share of Russian oil loadings for India to 17.4% in December, a sharp fall from 63.1% in November and 70.4% in October.
• Intermediaries like Redwood Global Supply FZE, Alghaf Marine DMCC, and RusExport have increased their supply of Russian crude to Indian refiners.
• India's Russian oil imports fell to a three-year low of around 1.2 million barrels per day (bpd) in December, down from 1.8 million bpd in November.
• Despite the drop, experts anticipate a gradual recovery in Russian oil volumes reaching Indian ports, contingent on the US not targeting new players or Indian buyers with secondary sanctions.

Detailed Insights:

• Following Russia's invasion of Ukraine in February 2022, India became a major destination for discounted Russian crude, with Russia becoming India's largest crude oil source for over three years.
• The US imposed sanctions on Rosneft and Lukoil on October 22, setting a November 21 deadline for winding down dealings with these companies, leading to a decline in their direct oil dispatches to India.
• Many of the new intermediary entities are based in the UAE, and there is limited publicly available information about them.
• Indian refiners can continue purchasing Russian crude as long as sanctioned entities, vessels, banks, or service providers are not involved, and the seller provides proof that the oil isn't from sanctioned players.
• The threat of secondary sanctions from the US influences India's caution in dealing with sanctioned countries and entities, despite its opposition to unilateral economic sanctions.
• Experts suggest that Russian crude flows into India are being rerouted through a growing network of intermediaries and logistical workarounds, indicating sustained demand.
• As of December 30, Russian oil loadings for Indian ports were at 1.3 million bpd, a 12.3% decrease from November, with Redwood Global Supply FZE leading at over 244,000 bpd.
• Vessel-tracking data indicates a rise in cargoes departing Russian ports without declared discharge locations, suggesting India remains a potential destination for these cargoes.

Key Concepts Involved:

• Primary Sanctions: Restrictions that curtail or prohibit engagement of American citizens and entities with sanctioned entities.
• Secondary Sanctions: Measures that seek to limit the engagement of other countries and their entities with the target country or entity.
• Crude Oil: Unrefined petroleum, a naturally occurring mixture of hydrocarbons that is processed to produce usable products such as gasoline, diesel, and jet fuel.