‘India’s Russian oil buys don’t violate any sanctions’: India’s oil refiners push back

India’s oil refiners say their Russian crude purchases comply with sanctions rules, noting the G7 price-cap was built to keep oil supplies flowing and prices in check. “Under the present sanctions architecture, India’s Russian crude purchases are lawful when conducted at or below the cap with proper compliance. United States and European Union guidance allows third-country purchases at or below the cap,” industry executives told Business Today

The sources pointed out that earlier the U.S. had explicitly supported such buying to stabilize prices and that the EU’s latest action mainly tightens access to its own market, not imposes a global ban.

US hypocrisy

The hypocrisy charge is central to New Delhi’s pushback against recent U.S. criticism. A resurfaced 2024 clip shows then-U.S. Ambassador Eric Garcetti saying Washington “wanted somebody to buy [Russian oil] at a price cap” to prevent an oil price shock.

Current comments by Treasury Secretary Scott Bessent faulting India for “profiteering” have further sharpened the debate; while other critics in Washington including Peter Navarro, a key architect of Trump’s trade policies, has alleged that India is acting as a “laundromat for the Kremlin,” and that its purchases are helping Russia fund its war in Ukraine.

“Don’t buy if you have a problem”

External Affairs Minister S. Jaishankar, has publicly responded to the latest criticism, stating that if American or European buyers “have a problem” with fuel refined by Indian companies, they should not buy it.

Industry sources pointed out that the price cap does not globally ban Russian crude, instead it only limits coalition shipping, insurance and finance above the cap with record-keeping requirements. Separately, the EU has now approved a ban with effect from next year on importing refined fuels made from Russian crude even if processed in third countries.

To date, no Indian refinery has breached the price-caps, the sources said. Only one company, Nayara Energy, was added to the EU’s Russia sanctions list on July 18 this year, because it is owned by Russia’s Rosneft. In 2017, a consortium of Rosneft, Trafigura-UCP had acquired Essar Oil Ltd for nearly $13 billion, later renaming it Nayara Energy. The deal was Russia’s largest outward, and the largest inbound foreign investment into India at the time.

“Big oil profiteering”

On the claims of US officials that Indian “big oil” was “profiteering” from Russian crude oil, the sources pointed out that India imposed windfall levies in mid-2022 and later withdrew them in December last year. Recently, the Union Cabinet approved Rs 30,000 crore to compensate state-run marketers for LPG under-recoveries, with sources citing this as evidence that part of any crude-discount gains has been cycled back via social and infrastructure investments. “Meanwhile, logistics have eaten into margins, with freight for Urals to India surging at times to about $7-8 million per voyage before easing, squeezing margins as discounts narrowed”, industry executives added.

As regards the intake of Russian oil, Indian Oil’s Paradip refinery is configured for high-sulfur crudes, while Mukesh Ambani’s Reliance Industries Jamnagar complex (among the world’s most advanced) is estimated to have averaged an intake of Russian crude at 47 per cent, fluctuating with arbitrage, according to Kpler-based tallies.

“India’s private refiners are structurally export-oriented and nimble on arbitrage, while PSU retailers dominate domestic sales and shoulder social obligations”, the sources said.