Indian companies have begun to reduce purchases of Russian oil in anticipation of new Western sanctions. Local companies are afraid of the restrictions that will follow due to the continuation of cooperation with Russia, and also note the market uncertainty caused by sanctions. This was reported by Reuters with reference to market participants.
The operator of the world's largest oil refinery, Reliance Industries Ltd, has abandoned Russian oil in favor of alternative suppliers. The company, one of the leaders in terms of purchases of Russian oil, has not yet placed new orders for dates with delivery later than December 5, after the introduction of new sanctions by Western countries. A similar wait-and-see position was taken by the state-owned Bharat Petroleum Corp.
Representatives of the companies declined to comment on the situation. However, the sources of the publication claim that Reliance is afraid of possible sanctions due to close cooperation with foreign banks that comply with Western sanctions and ensure that their counterparties do not violate the imposed restrictions.
“The sanctions mechanism creates too many uncertainties. We do not know what the payment mechanism could be and what the maximum price will be set, ”a source in one of the state-owned companies told the publication.
However, not all companies decided to play it safe and not take risks: for example, the state-owned Indian Oil Corporation (INC) asked Russia for oil supplies even after December 5. The company intends to receive Russian oil in order to minimize the risks of interruptions in production processes. A source close to the company explained the continuation of cooperation with Russia by the impossibility of quickly rebuilding already established supply chains. He also noted that, unlike other companies, INC could not quickly switch to supplies from the Middle East.
Nayara Energy will also continue to buy Russian oil, although the reasons are quite obvious: 49% of the company belongs to the Russian state company Rosneft, for which restrictions have already been introduced against it at the international level. International banks have not cooperated with the company for a long time, and it conducts all financial transactions through local financial organizations.
The issue of supporting oil transactions in view of the imminent imposition of sanctions remains one of the most acute for potential buyers of Russian oil. Western restrictions prohibit the provision of any services to buyers of Russian oil if the purchase price was above the established ceiling. However, India has already created its own alternatives to Western insurers and financial institutions, so these sanctions should not be a problem, the agency notes. India and Russia intend to continue cooperation by increasing settlements in national currencies, for which the Russian Gazprombank, VTB and Sberbank have already created the necessary infrastructure and opened the corresponding accounts in Indian banks.
The upcoming restrictions are likely to have a negative impact on Russian budget revenues, which are increasingly tied to energy supplies. Against the backdrop of new sanctions, China has also decided to reduce imports of Russian oil: local companies, like Indian ones, are afraid of uncertainty and possible restrictions due to cooperation with Russia. The growth of risks has already led to a decrease in the volume of purchases and the search for alternative suppliers. Analysts note that this situation will force Russia to offer an additional discount on its products, which will further reduce revenues.