US sanctions on Russian oil majors may hurt Reliance Industries, Nayara

Rosneft, Lukoil major suppliers to India; crude import bill may rise by over ₹23K cr

The Donald Trump administration in the US has imposed sweeping sanctions on Russia’s largest oil producers — Rosneft and Lukoil — in a fresh bid to end the war in Ukraine. The move is expected to hit oil purchases by India’s private refiners, including Reliance Industries (RIL) and Nayara Energy, while state-run refiners, which largely buy Russian crude through traders, are likely to remain insulated for now. 

The sanctions, according to experts, are likely to push up India’s annual oil import bill by $2.7 billion (₹23,490 crore). While Russia accounts for 35-40 per cent of India’s crude oil imports by volume, these two oil majors alone contribute 60 per cent of that supply. 

Mukesh Ambani-led RIL holds a long-term contract to purchase nearly 500,000 barrels per day (bpd) of crude from Rosneft, while Nayara Energy is 49 per cent owned the Russian state-owned major. By contrast, Indian state-run refiners have no term deals with Moscow and rely majorly on spot cargoes arranged through intermediaries. 

The US Treasury’s Office of Foreign Assets Control  has given companies until November 21 to wind down existing transactions with Rosneft and Lukoil. 

The state-run refiners have not received any direction from the Indian government to reduce or halt Russian oil purchases, but there is constant uncertainty, a refinery executive told Business Standard. “Discounts on Russian oil are disappearing anyway. The advantage has become marginal while challenges keep increasing. No one is telling us where to buy from, but we are increasingly cautious.” 

Public-sector oil firms include Indian Oil Corporation (IOCL), Bharat Petroleum (BPCL), Hindustan Petroleum (HPCL) and Mangalore Refinery and Petrochemicals (MRPL). Reliance and Nayara dominate the private refinery segment. 

The stocks of leading Indian oil companies were in the red on Thursday. While HPCL dropped 3.28 per cent, Indian Oil declined 2.56 per cent. BPCL and RIL fell 2.33 per cent and 1.17 per cent respectively. 

Queries to the oil ministry, IOCL, BPCL, HPCL, and RIL remained unanswered at the time of going to press.

 

Trump also told reporters at the Oval Office: “By the end of the year, they (India’s Russian oil imports) will be down to almost nothing, almost 40 per cent of the oil. India, they've been great.” 

Speaking alongside NATO Secretary-General Mark Rutt, Trump called the sanctions “tremendous” and “very big,” adding: “We hope that the war will be settled.” He suggested the sanctions “won’t be on for long.” 

The decision marked a sharp reversal for Trump, who just a week earlier had said he planned to meet Russian President Vladimir Putin and believed Moscow wanted to end the war in Ukraine. But on Tuesday, Trump indicated a possible change of heart, saying he didn’t want a wasted meeting. “... Every time I speak with Putin, I have good conversations, and then they just don’t go anywhere,” said Trump. 

According to Jorge Leon, head of geopolitical analysis at Rystad Energy, “The latest sanctions represent a significant and unprecedented escalation in Washington’s pressure campaign against Moscow.” 

“The sharp rise in oil prices following the announcement underscores market fears that Russian crude exports -- particularly to India, one of its key customers -- could fall sharply,” said Leon. 

At 8 pm IST, Brent crude was trading at $65.63 per barrel, up 4.86 per cent, while WTI crude was at 61.56 per barrel following a gain of 5.23 per cent. 

India–Russia oil trade 

New Delhi has so far maintained that its energy policy is guided by national interest -- ensuring affordable and secure supplies for consumers -- despite sustained Western pressure to curtail Russian imports. But the new sanctions threaten to test that stance more severely than before. 

India imported 1.8 million bpd of Russian crude in the first half of October. Of this, private refiners, mainly Reliance and Nayara , accounted for more than half. In September, they accounted for 1.02 million bpd out of India’s total 1.57 million bpd Russian imports, according to maritime intelligence firm Kpler. 

“For payment channels, anybody who facilitates such transactions is also legally violating sanctions. The banks will. Therefore, refuse such payments. They have to deal with the US, European banking systems,” said Prashant Vasisht, VP & co-head, corporate ratings at ICRA. 

While India can substitute the purchases from Russia with suppliers from West Asia and other geographies, the import bill for crude oil would increase. "On an annual basis, the replacement by market priced crude would lead to an increase in import bill by slightly less than 2 per cent,” Vasisht said. India's crude oil import bill stood at $137 billion in 2024-25. 

“From our understanding, for most Indian oil marketing companies -- which largely buy Russian crude via third-party traders -- the immediate operational impact should be limited,” said Sumit Ritolia, lead research analyst for refining and modelling at Kpler. “However, for RIL, given its direct term agreements with Rosneft, this development could introduce some near-term friction, particularly from a compliance standpoint.” 

India is a net importer of crude oil, dependent on imports for over 87 per cent of its domestic needs.