All Indian refiners are now refusing to take Russian crude transported on vessels of sanctioned Russian tanker fleet owner Sovcomflot to avoid running afoul of the stricter enforcement of the U.S. sanctions on Russia, Bloomberg reported on Friday, quoting unnamed sources with knowledge of the matter.
The U.S. levied new sanctions against Russia last month, on the second anniversary of the Russian invasion of Ukraine and in response to the death of opposition politician and anticorruption activist Alexey Navalny.
Among the 500 targets of the new sanctions, the U.S. Treasury and State are targeting Russia’s tanker operator Sovcomflot and more than a dozen crude oil tankers linked to the Russian state-owned firm.
All Indian refiners are now carefully checking the ownership chain of every tanker carrying Russian crude to make sure the vessels are not affiliated with Sovcomflot or other entities on the U.S. sanctions list, Bloomberg’s sources said.
Earlier this week, two unnamed sources familiar with the situation told Reuters that India’s largest refiner, Reliance, had stopped buying crude oil sourced from Russia and carried on tankers owned by Sovcomflot as the U.S. tightened sanction enforcement.
As a result, Reliance has asked its Russian oil trading partners to not load the shipments on Sovcomflot vessels, Reuters’ sources said.
Refiners in India have started to worry that the new sanctions would make it more difficult to have oil shipped from Russia on non-sanctioned vessels, which would raise shipping costs and eat into their refining margins, according to sources who spoke to Reuters at the end of February.
India will still buy crude from Russia but only if it is sold below the G7 price cap of $60 per barrel and is shipped on non-sanctioned vessels, an Indian government source told Reuters.
Even before the latest U.S. sanctions, refining margins for India’s biggest state-owned refiners had dropped amid more difficult access to Russian crude and soaring freight rates due to the Red Sea disruption to shipments, analysts and traders told Bloomberg last month.
By Tsvetana Paraskova for Oilprice.com
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