The Biden administration’s sanctions, which target Russian oil producers Gazprom Neft and Surgutneftegas along with 183 vessels involved in shipping Russian oil, aim to diminish Russia’s oil and gas revenues amid the ongoing conflict in Ukraine.
However, Indian stakeholders believe they have a six-to-eight-week window to recalibrate their sourcing strategies and establish a new equilibrium in crude oil procurement.
This period provides an opportunity for refiners to rework their arrangements and study market dynamics closely. Should renegotiation of supply contracts become necessary, potential alternatives include sourcing crude oil from Latin American countries, the Middle East, or West Asia. This strategic pivot is expected to mitigate immediate disruptions while offering time to evaluate market conditions.
Key considerations for refiners during this transition will revolve around pricing, crude quality, and the continuation of discounts. While Russian oil has been offered at significant discounts, these advantages may not extend to non-Russian sources. The potential for discounts on oil priced at $60 per barrel or below remains under examination, but the overall landscape suggests fewer cost benefits outside of Russian supplies.
Refiners are also assessing the implications of these sanctions on longer-term operations. A disruption in established supply chains could be destabilising if not managed carefully. Nevertheless, Indian officials remain cautiously optimistic, projecting minimal short-term disruption and no immediate challenges in securing crude oil supplies.
