Indian oil refiners were reportedly unhappy with Wednesday’s news that President Donald Trump imposed heavy sanctions on Russia’s two largest oil companies, Rosneft and Lukoil.
Indian importers are reportedly saying the new sanctions are tough enough to make them cut their purchases of Russian oil, a move long desired by the Trump administration.
Trump authorized the sanctions after calling off his planned summit with Russian President Vladimir Putin in Budapest.
“We cancelled the meeting with President Putin – it just didn’t feel right to me. It didn’t feel like we were going to get to the place we have to get. So I cancelled it, but we’ll do it in the future,” Trump told reporters Wednesday.
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The sanctions against Rosneft and Lukoil were announced by the Treasury Department on Wednesday night, causing worldwide oil prices to spike by five percent on Thursday morning.
“Today’s actions increase pressure on Russia’s energy sector and degrade the Kremlin’s ability to raise revenue for its war machine and support its weakened economy,” the Treasury Department said.
“Now is the time to stop the killing and for an immediate ceasefire,” declared Treasury Secretary Scott Bessent.
“Given President Putin’s refusal to end this senseless war, Treasury is sanctioning Russia’s two largest oil companies that fund the Kremlin’s war machine. Treasury is prepared to take further action if necessary to support President Trump’s effort to end yet another war. We encourage our allies to join us in and adhere to these sanctions,” Bessent said.
The Treasury Department’s Office of Foreign Assets Control (OFAC) designated a long list of subsidiaries of both giant Russian oil companies for additional sanctions and warned that doing business with any of them could trigger secondary sanctions.
Rosneft, Lukoil, and their subsidiaries produce about five percent of the world’s oil. The largest buyers of that oil since Russia invaded Ukraine in 2022 have been India and China. India is currently Russia’s top oil customer.
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Putin on Thursday denounced the sanctions as an “unfriendly act that does nothing to strengthen Russian-American relations.”
“The new western sanctions will not have a significant impact on the Russian economy,” he predicted.
The Russian Foreign Ministry also sought to downplay the impact of the tighter sanctions by claiming Russia’s economy has developed a “strong immunity” to such measures, but Indian refineries quickly made it known that their purchases of Russian crude would drop to nearly zero because of the new sanctions.
Combined with the pressure from a punitive 25-percent tariff Trump imposed on India in August for buying Russian energy products, the sanctions on Rosneft and Lukoil make their products more expensive for India to buy than oil from competitors.
India imported virtually zero oil from Russia before the invasion of Ukraine began in February 2022. Deep discounts offered by Russian oil producers, who were seeking new buyers after their old customers fled, persuaded India to ramp up its imports of Russian crude with remarkable speed.
The end of India’s chemical romance with Russia could be equally abrupt. Russia’s discounts have been reduced over the past year, and Indian refiners have demonstrated they can source crude oil from other suppliers, although New Delhi has resisted Trump’s demand to quit cold turkey until now.
Bloomberg News on Thursday quoted unnamed Indian oil executives who said “flows of Russian oil to major Indian refiners are expected to fall to near zero” because of the new sanctions.
“A sole exception could be refiner Nayara Energy Ltd., which is backed by Rosneft and has already been sanctioned by the UK and the European Union. The refiner has been operating exclusively on Russian crude since EU sanctions came into effect in July and doesn’t have other supply options,” Bloomberg reported. Nayara Energy has accounted for about 16 percent of India’s imports of Russian oil this year.
One of India’s other largest importers, Reliance Industries, said on Thursday it would “recalibrate” its purchases in light of the U.S. sanctions. A source close to the company told the Financial Times that Reliance was unlikely to “take a chance” that further orders for Russian crude could trigger secondary U.S. sanctions.
The Indian government declined requests from several media outlets on Thursday to comment on the sanctions.
Surprisingly, Trump’s new sanctions appeared to rattle China as well, even though Beijing has long insisted it would never alter its economic decisions based on “bullying” sanctions from the United States.
A source close to China’s biggest state oil companies told the Financial Times on Thursday that Beijing has asked several of its state-owned refiners to suspend purchases of Russian crude – but almost all of them have paused their orders, even if Beijing did not ask them to.
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