No More Russian Oil For India? Refineries' Concerns Mount As US Waiver On Sanctions Approach Expiry

New Delhi: The waiver granted by the US regarding sanctions on Russian oil is set to expire on May 16. If the US does not extend this waiver beyond this weekend, Indian oil refineries may be compelled to reduce their imports of crude oil from Russia. Indian refineries, already grappling with the fallout from the conflict in Iran, are apprehensive about this situation.

According to sources familiar with the situation at Indian refineries, the US has not yet clarified whether the waiver—which permits certain nations, including India, to purchase Russian oil—will be extended beyond May 16. If this waiver is not extended, Indian refineries may be forced to procure more expensive oil cargoes from other nations. Speaking to Bloomberg, sources indicated that such a scenario could drive up India's oil procurement costs.

How Much Russian oil is India importing?

According to data from Kpler, India's imports of Russian oil have reached a record high of 2.3 million barrels per day so far in May, as cargoes of Russian oil loaded under the current waiver arrived in the country. However, if no new shipments are observed heading toward India from Russia, the average import volume for the entire month could drop to 1.9 million barrels per day.

The conflict in Iran has severely disrupted the global oil market. Oil supplies from the Persian Gulf to major purchasing nations like India have been critically affected. India is the world's third-largest importer of crude oil.

As part of its efforts to curb rising oil prices, the U.S. issued a special waiver for India on March 5. Following this waiver, Indian refineries purchased Russian oil cargoes that were already at sea. One week later, the U.S. extended this relief measure globally. The validity of the waiver was subsequently extended, and it is now scheduled to expire on May 16.

Have Indian Refineries Begun Preparations?

Ahead of this deadline, India's two largest state-owned refineries—Indian Oil Corporation (IOC) and Bharat Petroleum Corporation Limited (BPCL)—have this week procured crude oil from West Africa and the United States. According to traders, these are 'prompt cargoes' that are scheduled to be loaded early this month. 

Furthermore, BPCL has initiated efforts to secure oil supply deals with Azerbaijan and African nations in a bid to reduce its reliance on the Persian Gulf.  On February 28, a conflict erupted between the U.S. and Israel against Iran; in retaliation, Iran effectively blocked the Strait of Hormuz—a critical maritime route for energy supplies. Consequently, the flow of oil and gas from Gulf nations via the Strait of Hormuz has come to a near standstill.