Mint Quick Edit | Trump’s sanctions are likely to squeeze Russian oil supply: Will it hurt India?

2 months ago 7

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Depending on the details, Indian importers may be exposed to the brunt of this US policy shift. (REUTERS)

Summary

US sanctions on Rosneft and Lukoil aim to choke Russia’s oil revenues and stop the Ukraine War. While this may be fanciful and workarounds might exist, Trump’s move has pushed up uncertainty on multiple fronts for India.

With US President Donald Trump expressing frustration over Russia’s refusal to halt its hostilities in Ukraine, his administration has imposed sanctions on two big Russian suppliers of crude oil—Rosneft and Lukoil—with the aim of choking Moscow’s revenues and ability to finance the war.

Together, they account for about half of Russia’s crude oil exports, estimated at 4 million barrels a day. Oil prices rose in response, although the extent to which overall supply may get squeezed is unclear.

Depending on the details, Indian importers may be exposed to the brunt of this US policy shift, although roundabout multi-port trading could potentially exploit loopholes in it. Also, Rosneft owns nearly half of India’s Nayara Energy.

While this refiner may not find it hard to get crude from Russia, speculation hovers over the question of whether its sales of locally refined products would face hurdles.

Meanwhile, further uncertainty stems from how sanctions will play out on market prices, which have lately been benign from the perspective of India’s economy, beyond the latest spike. An upshift would be bad news not just for us, but all major oil-consuming nations, the US included.

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