Ships carrying Russian crude oil to India are in a predicament. New U.S. sanctions come into play this Friday. Because of that fact, tankers already en route on the seaway face uncertainty: if they fail to reach Indian ports before the deadline, the oil on board may not be allowed to unload. Traders try to accelerate the movement of the ships, though it's not clear how much that would help.
Deadline Creates Uncertainty
Tankers linked to blacklisted Russian companies Rosneft and Lukoil are now headed to India. According to data from Kpler, the total cargo of these vessels is around 7.7 million barrels of crude oil. The U.S. sanctions will take effect from November 21. Given this, the vessels are likely to reach India only after November 21st. For this reason, there is growing skepticism over whether the consignment of oil can be unloaded at Indian ports. With the deadline looming large, oil traders have become increasingly worried.
Ships head to Reliance and Nayara ports
Most of the tankers are headed to either Reliance Industries' Jamnagar refinery or Nayara Energy's Vadinar port. Arrivals can be as late as the last week of November or even early December. Still, tankers can declare a change in destination while underway. Traders are anxiously awaiting word on how India will view Russian oil falling under U.S. sanctions. Their moves will help determine, in part, future shipping patterns.
Growing U.S. Pressure
The U.S. wants to block Russia from getting any funds that could be used to finance its war in Ukraine. India faces similar pressure. Five Indian firms, including Reliance, have ceased purchasing Russian oil. Indian Oil Corp. continues to buy varieties not under sanction. Nayara Energy, dependent on heavy imports of Russian supplies, is still importing the fuel.
Questions About Possible Exemptions It is not clear whether Indian companies have sought any exemptions from the U.S. to continue purchases beyond the deadline. Last week, the U.S. gave some concessions to Hungary over imports of Russian oil. Similar relaxations were given for transactions involving Lukoil. The latest sanctions in place starting Friday cover four big Russian companies. These together account for nearly 80 percent of Russia's oil exports to India.
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