Why new US sanctions on Russian oil may hit India hard

India is set to reject oil tankers sanctioned by the US for their role in moving cargoes for Russia, another example of the impact that Washington’s measures are having on the global oil market.

On Friday, the US announced the most aggressive sanctions yet on Russia’s energy trade, just days before Joe Biden is to be replaced by Donald Trump as president. Oil prices have since surged above $80 a barrel with key traders, insurers — and about 160 tankers — listed by the Office of Foreign Assets Control.


Previous US sanctions on tankers proved highly disruptive, creating an open question about what the response of buyers will be to Friday’s measures.

A senior Indian bureaucrat told reporters that sanctioned vessels won’t be allowed to discharge. That excludes ships chartered before January 10, provided they unload by March 12.

The official, who asked not to be identified because of the sensitivity of the matter, also said:

• The impact of sanctions will be felt when a wind-down period expires in two months
• Oil supply is not an issue. OPEC has 3 million barrels a day of spare capacity while non-OPEC suppliers like US, Canada, Brazil, Guyana can easily add barrels
• Price is an issue but the rally above $80 shouldn’t last long
• India’s oil refiners are heading for negotiation of term supply deals with Middle East suppliers. Depending on the market, they may seek extra barrels
• India is examining what happens to stake held by state companies in Vostok oil project that was sanctioned
• India’s refiners may lose discounts they were enjoying for Russian oil if supply becomes scarcer
• Russia has yet to communicate its position on the sanctions
• Russia will find ways to get its barrels to India
• Indian banks will demand certificates of origin to ensure crude doesn’t come from sanctioned suppliers