India Seeks Alternatives To Russian Oil
Following Russia’s invasion of Ukraine in 2022, India emerged as a major buyer of Russian oil that was widely and rapidly sanctioned by the West. However, all that may be about to change, courtesy of a fresh wave of U.S. sanctions on Russia and India’s own scramble to find alternatives. Such a shift is unlikely to be quite as simple or swift. India’s imports from Russia currently make up for a remarkable 40% of its total oil purchases on the global market, up fourfold from around 10% in 2021 – the year before hostilities began in Ukraine. A noticeable jump in the flow of Russian oil to India happened in the second half of 2022. That’s when the U.S. and its allies slapped a price cap of around $60 per barrel for cargoes of Russian crude to access Western services needed for shipping, including insurance and tankers. While the idea was to limit both Russian crude volumes on the global market as well as earnings from the sale of oil, India headed the pack of buyers that took advantage of the bind Moscow found itself in. Gradually, a monthly oil trading partnership between Delhi and Moscow worth nearly $3 billion or 1.85 to 1.95 million barrels per day took shape, according to the Centre for Research on Energy and Clean Air (CREA). Much of the oil was delivered via fleets of dark or ‘shadow’ tankers, i.e. tankers with unclear ownership structures created through various entities that make it difficult to pin down who actually owns or controls them, as well as compel them to follow Western sanctions. Last year, CREA noted that: “81% of the total value of Russian seaborne crude oil was transported by ‘shadow’ tankers, while tankers owned or insured in countries implementing the price cap accounted for 19%. “Russia’s reliance on tankers that are owned or insured in G7 countries has fallen due to the growth of ‘shadow’ tankers. This subsequently impacts the coalition’s leverage to lower the price cap and hit Russia’s oil export revenues.” But on January 10, the U.S. announced a fresh wave of sanctions to target such tankers carrying Russian oil, along with maritime insurance providers based in the country. In a statement, the U.S. Treasury said it was imposing further sanctions on Russian oil and gas exploration and production firms Gazprom Neft and Surgutneftegas, networks that trade Russian oil and 183 vessels that may have shipped such cargoes.
OPEC’s share in India’s annual oil imports rises after 8-yr drop
OPEC’s share in India’s crude oil imports edged up in 2024, rising for the first time in nine years, while top supplier Russia’s share remained steady, data obtained from trade sources showed. Russia’s share in the world’s third-biggest oil importer and consumer is expected to drop in 2025 after Washington last Friday announced sweeping sanctions targeting Russian producers and tankers, disrupting supply from the world’s No. 2 producer to India and China and tightening ship availability. India imported 4.84 million barrels per day of oil in 2024, up 4.3% from the previous year, the data showed. The share of Organization of the Petroleum Exporting Countries (OPEC) in India’s 2024 crude imports rose to nearly 51.5%, up from 49.6% in 2023, while Russia’s share in 2024 remained at about 36%, the data showed. There is higher demand for Middle Eastern barrels from Asia refiners, especially India, due to lower Russian supplies, said Priti Mehta, senior research analyst at consultancy Wood Mackenzie. Indian refiners have stepped up purchases of Middle Eastern grades since late 2024 as Russian supplies fell, refining sources told Reuters last month. The share of Middle Eastern oil in India’s December crude imports rose to a 22-month high to about 52%, the data showed. However, Russia continued to be the top oil supplier to India, followed by Iraq and Saudi Arabia in December. In recent years, Russia became India’s top supplier as its refiners were drawn to Russian oil sold at a discount after Western nations imposed a price cap and shunned purchases from Moscow. That caused OPEC’s market share in India to shrink to nearly 50% in 2023 from 64.5% in 2022. OPEC’s share has also been consistently declining since 2016 as Indian refiners diversified their purchases to reduce costs.
2025 is a Highly Unpredictable Year For OPEC+
Another year, another set of challenges and dilemmas for OPEC+. The group is set to start unwinding its oil production cuts, but it will have to contend – once again – with many uncertainties and be ready to react to unpredictable events in 2025. From demand concerns to supply uncertainties, OPEC+ has its work cut out for this year, too. The alliance of OPEC and a dozen non-OPEC producers led by Russia will closely watch several major factors for global oil markets this year. These include whether China’s oil demand will rebound in 2025 following lackluster consumption and imports last year, how the incoming U.S. Administration will tackle China, Russia, and Iran, and whether incoming President Donald Trump will choose to impose tariffs not only on China but on major trade partners and allies, too. All these are outside OPEC+’s control. But there is something the group can – or at least should – control: the level of compliance with its own oil production ceilings. Elusive Compliance Rather than targeting a specific price of oil (preferably above $80 per barrel) or market share to recoup from non-OPEC+ producers, the key consideration for OPEC+ in both 2025 and 2026 is full compliance and compensation for historical overproduction, according to Bassam Fattouh, the Director of the Oxford Institute for Energy Studies (OIES), and Andreas Economou from OIES. “These criteria are essential for the group’s cohesion and for the agreement to have its desired effects on market balances and shaping market expectations,” Fattouh and Economou wrote in an analysis this month. “Achieving these criteria will also provide OPEC+ with more flexibility to navigate the current market uncertainties,” they added. OPEC+, in early December, decided to delay the start of the easing of the 2.2 million bpd cuts to April 2025, from January 2025. The group also extended the period in which it would unwind all these cuts into the following year, until September 2026. The alliance reiterated the importance of compliance with the cuts and the timely compensation for those producers who haven’t adhered to their assigned quotas. The OPEC+ overproducers – OPEC’s Iraq and non-OPEC+’s Russia and Kazakhstan – still have work to do to fall in line. All three have pledged to compensate for previous overproduction with deeper cuts. Russia, Iraq, and Kazakhstan submitted in July 2024 their compensation plans to the OPEC Secretariat for overproduced crude volumes for the first six months of 2024. The cumulative overproduction in these six months was about 1.184 million bpd for Iraq, 620,000 bpd for Kazakhstan, and 480,000 bpd for Russia, OPEC said back then. Russia’s plan envisages Moscow mostly compensating for its overproduction in the months of March to September due to the more challenging conditions in the winter. Now the compensation period is also being extended until the end of June 2026. Supply and Demand Uncertainties This change in compliance and compensation timelines could alter market balances at a time when many other factors are at play. Due to the OPEC+ decision to delay the start of supply additions to April 2025, the market surplus in 2025 may not be as large as previously feared, but a surplus we will see, analysts say. The next OPEC+ moves will depend on a variety of market movers. OPEC and the wider OPEC+ group pride themselves on being proactive in managing oil market balances, but they may have to be reactive once again this year. Supply from Russia and Iraq is already coming under pressure. On its way out, the Biden Administration just sanctioned Russia’s oil exports, traders, and tankers with the heaviest set of sanctions yet. This sent oil prices rallying above $80 per barrel in just two days. The Trump Administration begins formally its term in office at the start of next week and more expansive sanctions from Trump on Iran are widely expected to follow soon. India and China are already looking to source alternative supply as they are reluctant to deal with tankers, traders, and insurers explicitly sanctioned by the U.S. If Russian and Iranian supply drops materially, the other OPEC+ producers could opt to return more barrels sooner rather than later. However, non-OPEC+ supply is set to grow this year, too, led by the U.S., Brazil, Guyana, Canada, and Argentina. This growth could be enough to meet the expected growth in global oil demand, and the market could find itself in a surplus with additional OPEC+ barrels. Moreover, the Trump Administration’s trade policies (read: tariffs) could slow economic growth in China, the U.S., and other major economies, potentially denting global oil demand growth in the near and medium term. Geopolitics and the foreign and trade policy choices of the new U.S. administration will impact the world order and economy, and OPEC+ will have to carefully navigate through all these to remain a relevant force in the oil market.
US sanction clarifications tighten squeeze on India’s February oil supplies
Indian refiners have less time than they expected earlier to receive sanctioned tankers, prompting inquiries for purchase of spot supplies from West Asian producers for February deliveries. Refiners led by Reliance Industries and Indian Oil have until Feb 27 to wind down transactions with sanctioned Russian tankers, opaque traders, a shadow fleet, and important insurers, an official from the US Treasury Department’s Office of Foreign Assets Control (OFAC) confirmed, a few days after Washington announced a fresh round of sanctions on Russian oil flows that left the market in some confusion over enforcement deadlines. The cargoes must be loaded before January 10 to evade sanction laws, the OFAC official said in an email reply to Business Standard, pointing to a clause in General Licence 120. OFAC’s General Licence 120 clarifies the winding-down date: “Except as provided in paragraph (c) of this general license, all transactions prohibited by E.O. 14024 that are ordinarily incident and necessary to the delivery and offloading of cargo involving the blocked persons listed in the Annex to this general license are authorized through 12:01 a.m. eastern standard time, February 27, 2025, provided that the cargo was loaded prior to January 10, 2025.” On payments, OFAC referred to GL 120 in a separate mail, which said that transactions were authorised through 12:01 am eastern standard time, February 27, 2025, provided that any payment to a blocked person must be made into a blocked account in accordance with the Russian Harmful Foreign Activities Sanctions Regulations, 31 CFR part 587. That effectively means that Russian oil cargoes on sanctioned vessels must reach India by February 20, as banks take a week to process payments, a refining official said, effectively shrinking supplies for February. Payments are getting delayed because banks are demanding the entire paper trail of individual Russian trades, officials said. Indian government officials said that Russian supplies are on track till February. But ship-tracking data and a surge in tenders for spot cargoes issued by Indian Oil and other refiners to cover for February reflect a crude oil shortfall in February. Reliance and Indian Oil did not comment on US sanctions. Russian oil supplies for February are already dropping, with arrivals estimated at below 800,000 barrels per day (bpd), according to ship-tracking data. Tanker arrivals in the first half of January averaged 1.5 million bpd, marginally higher from December, with predictions of as much as 1.9 million bpd for January, the highest since July, according to market intelligence agency Kpler. Bookings for January cargoes are made 45 to 60 days in advance. Typically, it’s early to call February, but the January 10 sanction order has led to cancellation of several tankers, industry sources said and refining data showed. More than 15 tankers which were supposed to load cargoes after January 10 for February deliveries were stranded after India rejected the cargoes.
Indian Oil Corp seeks sour oil from spot market, trade sources say
Indian Oil Corp(IOC), the country’s top refiner by capacity, is seeking to buy high-sulphur oil through spot tenders, its first sour crude import tenders since March 2022, trade sources said on Thursday. The company has also launched a separate tender seeking sweet crude, the sources said. IOC is seeking cargoes loading March 1-15. The tenders close on Thursday with bids remaining valid until Friday, they said.
India overhauls E&P regulations in a bid to raise domestic hydrocarbon production
How legislative reforms and ambitious exploration plans are transforming India into a global energy investment hotspot—and why international investors are taking notice. Global investors take notice when a nation importing more than 85% of its crude oil decides to revolutionise its energy exploration framework. India’s recent parliamentary approval of amendments to the Oilfields (Regulation and Development) Act, 1948 signals more than just regulatory change—it represents a calculated move to position the country as a premier destination for global energy investment. For international investors, this legislative reform is a strategic pivot designed to attract an unprecedented level of international capital and expertise to one of the world’s most promising energy markets under significantly improved conditions for exploration and production of hydrocarbons in a more sustainable manner. Breaking down the investment catalyst The cornerstone of India’s energy sector transformation lies in a comprehensive legislative overhaul. These amendments are not mere technical adjustments, but carefully crafted incentives designed to attract international capital and expertise. By modernising terminologies and aligning regulations with global standards, India has effectively removed all barriers to investment. For ESG-conscious investors, India presents a unique proposition The reforms address long-standing concerns of international investors, particularly regarding regulatory predictability and operational flexibility by introducing a framework that aligns with international norms, making it easier for energy companies to navigate the Indian market. For instance, the modernisation of terms like ‘mineral oils’ might seem technical, but it represents a fundamental shift in how India approaches energy sector governance. This alignment with international standards eliminates the confusion that has historically deterred potential investors and creates a framework that global energy companies can easily navigate. The numbers that matter What makes this opportunity particularly compelling is its scale. India is offering exploration blocks spanning 50,000km²—a scale that demands attention from serious players in the global energy market. More significantly, the country has opened up 99% of previously restricted areas for exploration, aiming to explore 15% of sedimentary basins by 2030. This ambitious expansion creates multiple entry points for investors of varying sizes and strategic interests. The sheer magnitude of unexplored territory, combined with India’s growing energy demand, presents a rare combination of scale and market potential. Early movers in this space have the opportunity to establish strategic positions in what could become one of the world’s most dynamic energy markets in terms of investment as well as return on investment. The right incentives The reformed regulatory framework introduces several investor-friendly features that significantly improve the risk-return profile of Indian energy investments. Key features include: – Lease term stability: Ensuring long-term visibility for planning and investment – Enhanced dispute resolution: Aligning mechanisms with international standards – Infrastructure sharing: Reducing operational costs and improving project economics – Streamlined approvals: Cutting administrative delays for faster project execution – Decriminalisation of non-compliance: Shifting focus from punishment to remediation. India’s strategy extends beyond mere regulatory reform. Additionally, the country is establishing a comprehensive ecosystem that includes: Competitive tax structures: Enhancing ROI, with specific provisions for technology-intensive projectsAdvanced technology transfer frameworks: Balancing intellectual property protection while fostering innovationRisk-sharing: Innovative risk-sharing models benefiting both large and small operators, creating opportunities for specialised players Support for enhanced oil recovery: With fiscal incentives for deploying advanced technologies Digital infrastructure integration: Simplifying operations and boosting efficiency.
U.S. Sanctions on China’s Oil Firms Are Just the Beginning Under Trump
Among the swathe of Chinese entities last week placed by the U.S. Department of Defense (DOD) on a blacklist of firms believed to be supporting Beijing’s military were several from its energy sector. Most notable of all, perhaps, were the China National Offshore Oil Corporation’s (CNOOC) international oil trading arm and the COSCO Shipping Corporation. As the DOD blacklist focuses on companies deemed a threat to U.S. national security, it should not surprise anyone that such Chinese firms are now on it. As highlighted by OilPrice.com back in the first presidency of Donald Trump, a sea-change had already emerged in China’s political and economic organisational structure following Xi Jinping’s assumption to the role of General Secretary of the Communist Party in November 2012, and then to President in March 2013. A key element of this was the increasingly pivotal role of the Communist Party in all main areas of economic and commercial management in the country. This aligned with Xi’s statement that: “Government, military, civilian, and academic, east, west, south, north, and centre, the [Communist] Party leads everything.” In practical terms, this meant that from that point board directors and company executives — including those in the energy sector — were under the standing instruction to ‘execute the will of the Party’. And as China expert Jonathan Fenby exclusively told OilPrice.com at the time: “This political-economic nexus is set to bring growing divergence from the U.S. as part of the wider agenda of the ‘national strengthening’ being pursued by Xi Jinping.” He added: “Beijing is shifting from being an economic adversary to the U.S. to a geopolitical alternative and this could result in a step change in the nature of the confrontation between the two countries.” President-elect Trump has long seen China as at minimum an ‘adversary’ rather than as a ‘competitor’ as President Joe Biden did, and this has not changed, according to senior sources in his first and current presidential team exclusively spoken to by OilPrice.com. Given the metamorphosis in the degree of interconnectivity in China’s political, economic and military elements during Xi’s rise in 2012/2013, Trump’s view appears well-founded. Even more so in one of Beijing’s national priority areas of securing its energy needs to power future economic growth. This is turn is used to expand its allied territories under the umbrella of the ‘Belt and Road Initiative’ (BRI), which in turn was always eventually aimed at enabling China to establish itself as a viable superpower alternative to the U.S., as analysed in full in my latest book on the new global oil market order. A taste of what was to come for the world’s greatest repository of oil and gas – the Middle East – came in December 2022 when former key ally of the U.S., Saudi Arabia’s Crown Prince Mohammed bin Salman, hosted a series of meetings in Riyadh between President Xi and the leaders of countries in the Arab League. This expanded upon all the key themes stated in January of that year when senior officials from the Chinese government met with foreign ministers from Saudi Arabia, Kuwait, Oman, Bahrain, and the secretary-general of the Gulf Cooperation Council (GCC). The basic theme was to forge a “deeper strategic cooperation in a region where U.S. dominance is showing signs of retreat” — in this instance centred on the signing of a China-GCC Free Trade Agreement. The new pact pledged cooperation in just about everything a country does, including finance and investment, innovation, science and technology, aerospace, oil, gas, and renewable energy, and language and culture. Following the signing of these all-consuming cooperation agreements, Xi then identified two priority areas that he believed should be addressed as quickly as possible: first, transitioning to using the Chinese renminbi currency in oil and gas deals done between the Arab League countries and China; and second, bringing nuclear technology to targeted countries, beginning with Saudi Arabia. On the first of these, China has also long been acutely aware that as the largest annual gross crude oil importer in the world since 2017 it is subject to the vagaries of U.S. foreign policy tangentially through the oil pricing mechanism of the U.S. dollar. This view of the greenback as a weapon was reinforced after Russia’s invasion of Ukraine and the accompanying U.S.-led sanctions that followed, the most severe of which was exclusion from use of the U.S. dollar. As the former executive vice-president of the Bank of China, Zhang Yanling, suggested in a speech in April 2022, China should help the world “get rid of the dollar hegemony sooner rather than later.” The second of Xi’s announced priorities at that time caused equal consternation in Washington, as it followed the discovery by U.S. intelligence agencies that Saudi Arabia was manufacturing its own ballistic missiles with the help of China. Even more concerning was that the same intelligence agencies also found that China had been building a secret military facility in and around the UAE port of Khalifa. The subsequent advance of China’s influence across the Middle East via the mechanism of the BRI and other levers had, in the zero-sum game of superpower supremacy, marginalised the influence of the U.S. and its allies in the former key cooperative states of Saudi Arabia and the UAE. It had also cemented existing opposition to it in Iran, Iraq, and Oman, among others, as detailed in full in my latest book on the new global oil market order. Crucially for Trump’s second term as president that begins on 20 January, China has yet to fully recover economically from its disastrous three years of Covid, which is constraining its ability to reach the finish line in the superpower race. As a senior source who works closely with the new presidential team exclusively told OilPrice.com recently: “China’s finances are failing [with struggling economic growth], Russia’s military has failed [in Ukraine and Syria], Iran’s proxies have been incapacitated [Hezbollah, Hamas, Houthis et al], North Korea is on the sidelines, and now Trump is back.” The
India rushes to pay for Russian oil ahead of sanctions cutoff
India’s state refiners are rushing to speed up payments for Russian crude, hoping to complete their trades before a dramatic expansion of Washington’s curbs on Moscow’s oil industry effectively comes into force next month, people familiar with the matter said. Pressure to stay clear of sweeping US sanctions means the refiners are now aiming to settle payments for the discounted barrels in just two days instead of the previous five, said the people, who declined to be named as the discussions are private. The fate of at least 4.4 million barrels of Russian crude currently on their way to Indian ports hangs in the balance. At least six sanctioned tankers have loaded different grades and are sailing toward ports including Jamnagar, Chennai, Paradip and Visakhapatnam, and are due to discharge at these ports before the wind-down period ends, according to ship-tracking data from Bloomberg and Kpler. The Mercury is expected to reach Paradip in eastern India this weekend, one of the earliest vessels to arrive. It is hauling more than 1 million barrels of Urals from Russia’s Sheskharis terminal, loaded in mid-December. Two sanctioned tankers discharged more than 1.4 million barrels at Indian ports in the state of Gujarat on Jan. 12, according to Kpler data. The Zaliv Amurskiy unloaded Urals at Jamnagar, while the Arjun delivered to Vadinar. Indian banks — increasingly cautious in expectation of tougher measures from Washington, even before Friday’s announcement — have been demanding additional paperwork since late last year, undertaking name screening and tracking incoming shipments. They are now ready to settle the payment on the basis of the bill of lading, the people said. Banks have also stopped processing payments in US dollars, to avoid having to adhere to the $60-a-barrel price cap on Russian crude set by Western nations in 2022. All payments for cargoes from Gazprom Neft PJSC, sanctioned on Friday, are being settled in rubles, the people said. The US Office of Foreign Assets Control has set a deadline of Feb. 27 for the delivery of all crude cargoes that were loaded on sanctioned vessels prior to Jan. 10, the day sanctions were made public — a “wind down” period that Indian buyers are keen to make the most of. India gets about a third of its oil imports from Russia. Government concerns with containing inflation have made the discounted crude particularly attractive, crowding out India’s more traditional counterparties. The latest round of sanctions — targeting two large producers, as well insurers, traders and more than 180 vessels — have put that cheap supply at risk.
OPEC, IEA to launch reports on India’s oil & gas sector at IEW 2025
he India Energy Week (IEW), government’s annual flagship oil and gas sector conference, will witness top international agencies such as OPEC and the International Energy Agency (IEA) launch their oil and gas reports on the world’s third largest energy consumer. The development indicates India’s growing importance as an energy consumer. At IEW 2024, the International Energy Agency (IEA) has launched a report on the oil outlook till 2030 in the world’s third largest energy consumer. The IEW 2025, which is scheduled to take place in New Delhi from February 11 to 14, is expected to witness participation from more than 20 Energy Ministers and Deputy Ministers representing advanced economies, largest energy producers, and key nations of global south. The event will also feature heads of leading international organisations and 90 CEOs from some of the world’s largest Fortune 500 energy companies including BP, TotalEnergies, QatarEnergy, ADNOC, Baker Hughes and Vitol. “IEW 2025 offers a platform where global stakeholders can freely exchange ideas, explore opportunities, and witness India’s leadership in navigating complex energy transitions. As a springboard for collaboration on key energy projects, including green hydrogen technologies, solar innovations, or advanced exploration techniques, this event represents a crucible of global energy innovation,” Oil Secretary Pankaj Jain said. Besides, the event will see OPEN launching the India oil demand report, while the IEA will launch a report on India’s natural gas sector.
US ban on Russian oil may not have instant impact
The recent sanctions imposed by the US on the Russian oil are unlikely to have an immediate or direct impact on India’s oil supply. Any major effects are expected to be felt in next two months, as per a senior official in the petroleum ministry. The official said, on condition of anonymity, the worst-case scenario of the sanctions on Russian crude would be that India will no longer receive discounted or cheaper crude and will have to purchase crude at the market price. “In the next two months, we don’t see major problems. It is too early to say,” said the official. The US imposed sanctions on Russian oil producers Gazprom Neft and Surgutneftegas on Friday, along with 183 vessels. The purpose of sanction is to disrupt revenue stream Moscow uses to fund its war with Ukraine. Many of these tankers have been used to ship oil to India and China, as Western sanctions and the price cap imposed by the Group of Seven (G7) countries in 2022 shifted flow of Russian oil from Europe to Asia. Some of the vessels carry oil from Iran, which is also under sanctions. However, the official maintained that he was hopeful that within next two months, new market dynamics would evolve. Indian refineries will study the market and subsequently buy crude from wherever they can get it at the cheapest price. The official said there would be no disruption as oil supply is not a concern and there are sufficient alternative suppliers. He pointed out that any shortfall in supply could be addressed by OPEC, which has spare capacity. Outside of OPEC, countries like Guyana, the USA, Canada, Brazil, and Suriname could step in to meet India’s needs. As per the official, while one of the sanctioned entities was not a major supplier to India, the other supplied a major amount of crude. “There will certainly be disruption, but it will not be immediate. This is because there is a transit period. For example, cargo already in transit will still reach us. The key is to have a window of six-eight weeks, during which current shipments can arrive. This six-eight week period provides time for buyers and producers to find solutions. It is possible that a producer might be willing to sell at a discounted price,” the official added.