EU Sanctions Impact on India's Oil Exports

The European Union's latest sanctions targeting Russian oil could significantly impact India's $15 billion fuel exports, according to the Global Trade Research Initiative (GTRI). These sanctions, the 18th package by the EU's 27 member states, aim at reducing Russia's oil and energy sector revenues, extending to petroleum products refined from Russian crude in third countries like India.

How India’s Oil Exports Will Be Affected

India, a major importer of Russian crude, processes and exports refined products globally. The EU's new measures could jeopardize India's $5 billion petroleum product exports to the EU, as they ban imports of refined petroleum made from Russian crude via third countries. GTRI highlights that only a few nations, including the US, UK, Canada, and Switzerland, are exempt from these restrictions.

Challenges for Indian Companies

Nayara Energy and Reliance Industries Limited (RIL) face operational challenges due to these sanctions. The EU has also lowered the Russian oil price cap and introduced vessel restrictions, effective September 3. Analysts warn that these companies risk losing access to European markets, complicating Rosneft's plans to divest its stake in Nayara.

Opportunities Amidst Challenges

Despite the hurdles, India could benefit from lower Russian oil prices, with Russian crude now constituting about 40% of India's imports. However, potential US sanctions and tariffs pose future risks. Oil Minister Hardeep Singh Puri remains optimistic, citing India's diversified supply sources as a buffer against potential disruptions.