The EU sanctions against Russia are expected to have significant implications for Indian refiners, according to a recent ICRA report.
On July 18, the EU implemented its 18th sanctions package against Russia, prohibiting imports of refined products derived from Russian crude oil from third countries, whilst exempting Canada, Norway, the US, the UK and Switzerland.
The impact on Indian refiners could be substantial, given their exports of petroleum products to the EU amounted to USD 14.3 billion in fiscal year 2025, as per ICRA’s assessment.
India has become a prominent processor of Russian crude, benefiting from price discounts previously ranging from $10-16/bbl.
Although these discounts have reduced to $2.5-4/bbl, the latest price cap and associated measures could lead to wider discounts.
The past three years have witnessed a considerable increase in India’s petroleum product exports to the EU, following reduced Russian supplies to Europe, with yearly exports reaching approximately USD 14-15 billion.
The latest EU sanctions are set to limit market opportunities for refiners in India, Turkey and the UAE who have been processing Russian crude for European markets.
The EU has also reduced the crude oil price cap from USD 60 bbl to USD 47.6 bbl, aligning with current global oil prices, and introduced a dynamic mechanism for future price cap assessments.
The regulations prevent EU entities from offering transport or insurance services for Russian oil traded above the specified limit.
The sanctions have added 105 vessels to the restricted list, totalling 444, subjecting them to port access and maritime transport service restrictions. Indian refiners have already terminated business relationships with sanctioned entities and traders.
Despite Russian oil exports constituting roughly 7 per cent of global liquid consumption, crude oil prices have remained steady, suggesting markets anticipate minimal supply disruptions.
