Russia’s India Oil Flows Hit by New US Sanctions

Russia’s crude pipeline to India has entered a period of unusual uncertainty as refiners in both India and China reassess purchases ahead of the 21 November deadline for US sanctions on state producers Rosneft and Lukoil. The shift is already visible in port activity, tanker routing and price movements across the wider crude complex.

During 1 to 17 November, loadings of Russia’s oil bound for India fell to an average of 672,000 barrels per day. This reflects a steep 66% contraction from October’s 1.88 million barrels per day, according to Kpler. The slowdown is part of a broader pullback where Russia’s total outbound loadings dropped 28% to 2.78 million barrels per day. A growing number of tankers are now sailing without declared destinations, which signals that exporters are searching for alternative buyers or safer logistical routes.

The hesitation has not been limited to India. November shipments to China fell 47% to 624,000 barrels per day, while flows to Turkey dropped by nearly 87% to only 43,000 barrels per day. The three markets accounted for close to 90% of Russia’s crude exports in October, which highlights the scale of the disruption now unfolding.

Despite the fall in fresh bookings, arrivals in India accelerated as refiners rushed to bring in previously contracted cargoes before compliance thresholds were reset. Imports averaged 1.88 million barrels per day between 1 and 17 November, up 16% from the October run rate.

What does it mean for trade flows over the coming months?

What Signals Are Emerging from Tanker Movements?

One of the clearest indicators of strain is the shift in shipping behaviour. Analysts at Kpler observed mid-voyage diversions between India and China and ship-to-ship transfers occurring near locations not typically used for crude handovers, including points off the Mumbai coast. These workarounds form part of a widening logistical toolkit as sanctioned and shadow-fleet vessels carry crude for most of the journey before transferring barrels to non-sanctioned ships that can lawfully enter Indian ports.

Data from the Centre for Research on Energy and Clean Air shows that 44% of Russian crude in October travelled on sanctioned tankers. With more entities now falling under US scrutiny, analysts expect Russia’s reliance on opaque transportation chains to deepen.

JPMorgan estimates that around 1.4 million barrels per day, or nearly one-third of Russia’s current seaborne export potential, is now sitting in tankers amid slower unloading and changing routes. Many refiners in India and China are waiting for greater regulatory clarity before stepping up purchases for December.

How are Prices and Procurement Decisions Evolving?

The market reaction has been swift. The discount on Russia’s Urals crude has widened sharply through November. Cargoes loaded from Novorossiysk were priced at 36.61 dollars per barrel late last week, with the spread to Brent widening to 23.51 dollars per barrel, the largest gap since March 2023. Urals typically traded at a 12-to-13-dollar discount before the sanctions were announced.

The widening spread reflects a buyer strike that has temporarily removed demand from major refiners. Several Indian refiners including Reliance Industries, Bharat Petroleum, Hindustan Petroleum, Mangalore Refinery and Petrochemicals and HPCL Mittal Energy have halted direct purchases from Rosneft and Lukoil. Together, these firms previously imported close to around one million barrels per day from Russia.

Chinese state refiners Sinopec and PetroChina, along with many private plants in Shandong, have also paused direct procurement. Rystad Energy estimates that nearly 45% of Russian crude normally supplied to China is currently affected.

With Rosneft and Lukoil accounting for about half of Russia’s crude exports at more than 2.2 million barrels per day, and other major producers already under US blocking measures, close to 70% of Russia’s total export volume now faces restrictions.

For India, the pause comes amid broader trade discussions with the United States. New Delhi recently signed its first annual LPG supply contract with US firms, covering nearly one-tenth of India’s import requirements, and energy has increasingly become a focal point in bilateral negotiations.

Analysts expect Russian flows to India to remain soft through December and January as refiners rely on unsanctioned intermediaries, blended cargoes and more complex supply chains. The oil will still find its way into the market, but the route it takes may become significantly harder to trace.

Conclusion

As the new trading landscape settles, the key question is how long refiners in India and China will wait before returning to more normal buying patterns?

Sources

Economic Times
The Moscow Times