US sanctions on Russian oil majors: Indian Oil says will abide by all sanctions imposed by international community

However, considering that other Russian oil exporters and traders dealing in Russian crude have not been sanctioned by Washington, some volumes of Russian oil could still find their way to India, although nowhere close to the volumes seen over the past three years. Russia is currently India’s largest source of crude, accounting for over 35 per cent of India’s overall oil imports so far in 2025. Majority of Russian crude oil flowing to India has been imported by private sector refiners Reliance Industries (RIL) and Nayara Energy, in which Rosneft is part of the promoter group.

RIL, which accounts for around half of India’s Russian oil imports, had said Friday that it was assessing the implications and compliance requirements following the sanctions, and will be “complying fully” with any guidance on the issue from the Indian government. According to industry sources, while the government has so far not issued any formal guidance to Indian refiners on the issue, RIL is likely to quickly wind down its oil imports from Russia.

RIL imports a bulk of its Russian oil directly from Rosneft under a term deal, which effectively means that it could be at the risk of attracting secondary sanctions from Washington if it continues to buy oil from the Russian oil and gas major. Public sector refiners like IOC do not have term deals with Rosneft or Lukoil, and buy most of their Russian oil from third-party traders. While not buying directly from Russian oil companies does provide a level of insulation to the government-owned refiners, they are still being extremely cautious on Russian oil buys and are adopting a wait-and-watch approach, it is learnt.

The threat of secondary sanctions from the US is the reason why countries like India, while politically opposed unilateral economic sanctions, usually steer clear of countries and other entities sanctioned by Washington. While primary sanctions—on Rosneft and Lukoil in this case—mainly curtail or prohibit the engagement of American citizens and entities with the sanctioned entities, secondary sanctions seek to limit the engagement of other countries and their entities—over whom the US has no legal control—with the target country or entity.

Oil industry insiders said that the companies and banks are likely to adopt an approach of abundant caution to ensure that they do not attract secondary sanctions. This effectively means that imports of discounted Russia crude could plummet, at least in the near future. While it is too early to estimate the actual impact of the US sanctions, industry sources said that government-owned refiners are already evaluating compliance risks. Banks, too, are expected to avoid transactions involving payments to the sanctioned entities and their known proxies.

The latest move from the Donald Trump administration—which had so far not imposed direct sanctions on Russian oil majors even as it pressured New Delhi to cut oil imports from Moscow—is a major escalation in its bid to force the Kremlin’s hand into ending the war in Ukraine. According to the US Treasury Department, all existing transactions involving Rosneft and Lukoil must be wound down by November 21.

Historically, India has avoided oil imports from countries like Iran and Venezuela, whose oil was sanctioned by the US, and industry watchers and experts expect a similar approach on oil from Rosneft and Lukoil. Given Indian refiners’ and banks’ exposure to the US—from dollar-denominated trade to access to the American financial system and markets—potential secondary sanctions could have a significant impact on them.

Indian refiners cannot really afford to be cut out of the US financial system and markets. They need that access for various reasons, including raising funds overseas and paying for their imports. Most of them have investments or arms operating in the US, and have long-standing business and trade relationships with American companies—from suppliers to process technology firms—that they might have to sacrifice if they are hit by secondary sanctions from Washington. India also buys crude oil and liquefied natural gas from the US.

Even prior to the imposition sanctions on Rosneft and Lukoil by the US, public sector refiners had accelerated the diversification of their crude oil import sources, raising import volumes from West Asia, Africa, North America, and South America. At the time, the reduction in Russian oil imports was attributed primarily to shrinking discounts on Moscow’s crude, and not pressure from the Trump administration. Those diversification efforts are expected to gather steam now.

On its part, the Indian government has consistently maintained that the country will buy oil from wherever it gets the best deal, as long as the oil is not under sanctions. But even though the American sanctions on Rosneft and Lukoil are not sanctions on Russian oil per se, they can really choke supplies to India, given the two companies’ disproportionately high share in Russian oil flows.

There has been some speculation that the refiners could continue buying Russian-origin crude from third-party traders and not directly from Russian oil companies, as none of these third-party traders have been targetted by the sanctions yet. However, experts opine that even these trades are bound to see a significant hit in the near term, as there may be a general aversion to get involved in Russian oil trade for the time being. They added that if the US is serious about curtailing Russian oil flows, it could swiftly start sanctioning such third-party traders as well.