Overview
In the current financial year, India’s largest oil company Indian Oil Corporation (IOC) recorded a fall in the oil imports from Russia. The reason for this is the sanctions imposed on 10th January, 2025 by the US on producers, tankers, and insurers of Russia in order to contract the oil revenue of Moscow. The aim to control the revenue of Moscow was to block the use of this money for the Ukraine war.

The former Biden regime enforced sanctions on about 180 oil shipping tankers of Russia. It also imposed sanctions on oil producers such as Surgutneftegaz and Gazprom Neft. The purpose of imposing sanctions was also to control the group of tankers which secretly export oil without following the sanctions.

Impact on Indian Oil
When Russia started a war with Ukraine, many European countries blocked trade and enforced sanctions on Russia. During this time, India became the major importer of oil from Russia through sea route. Before the start of the war with Ukraine, the oil imports in India from Russia was only around 0.2 percent. However, it surged to about 40 percent in the years 2023 and 2024. In present times, it is around 30 percent.

In the current month, the imports of Russian have reduced. The company is projecting more reduction of oil imports from Russia. In the initial nine months of the financial year 2025, the amount of oil import was registered to around a quarter of the total crude imports of the company. It is lower compared to 30 percent of oil import in the previous financial year.

IOC’s approach
Following the implementation of sanctions on 10th January, 2025, the company has not yet signed any fresh spot contracts with Russian oil companies. Many Russian oil companies are suffering from sanctions imposed on them. This will not only affect the import levels of oil in China and India but also affect import levels of oil for different countries in the world. It could lead to possible contraction in Russia’s total exports level. This will result in a slight impact on India as well.

Currently, the company is finding out Russian oil which has not been imposed by sanctions. It is trying to find a complete supply chain which consists of tankers, suppliers, and insurers, free from sanctions. The firm is trying to search for the purpose of immediate delivery.

The Indian Oil company has decided to bridge the oil gap by importing from its other supply networks and markets. Also, it will import oil from Russia in case of fair discounts offered. In the month of December, the discount given on Russian oil was about 3 dollars per barrel but now it is about 2 dollars per barrel.

The company has taken the approach of diversifying its oil import sources. In current times, the company imports oil from about 39 countries which is higher than the 29 countries in the past. This approach is to protect from the adverse impact of sanctions on Russian imports. The company is not yet sure about the extent of adverse effects but it strongly believes that it will only slightly affect the supply of energy and oil availability of India.

The Trump’s regime made a public statement of increasing oil production in the US. The company is positive about increasing imports from the US. However, it will give importance to pricing points. The government of India also hinted at importing energy from the USA but at reasonable value.

For the upcoming six months to around one year, the company believes that the prices of oil will continue to be in between $75 to $80 per barrel. The reason for this is expansion in supply of oil in the international market.