The European Union (EU) has introduced its 18th round of sanctions against Russia, which could badly affect Indian oil refiners. According to a recent report by ICRA, Indian petroleum exports worth around $14.3 billion to the EU are now at risk.
What the EU Sanctions Say:
On July 18, the EU banned the import of oil products made from Russian crude oil, even if the oil was refined in other countries like India, Turkey, or the UAE. However, some countries like the US, UK, Canada, Norway, and Switzerland are exempt from this ban.
Why India Is Affected:
- India has been buying discounted Russian crude oil, refining it, and exporting the refined products to Europe.
- Over the last few years, India has become a major exporter of these products to the EU, earning $14–15 billion annually.
- But now, with the new ban, Indian companies can no longer sell these products to the EU, which is a major market.
Price Cap and Discounts:
- Earlier, India enjoyed price discounts of $10–16 per barrel on Russian oil, but now the discount has dropped to around $2.5–4 per barrel.
- The EU has also lowered the price cap on Russian oil from $60 to $47.6 per barrel and will adjust this cap regularly.
- If Russian oil is sold above the cap, EU companies can’t help with shipping or insurance for those deals.
Other Measures:
- The EU has added 105 more ships to its list of restricted vessels, bringing the total to 444 ships that now face port and transport limits.
- Many Indian refiners have already stopped dealing with traders and companies that are under these sanctions.
What This Means for Indian
- Indian oil companies may lose a big chunk of their export earnings from the EU.
- The new rules also affect Turkey and the UAE, which were similarly exporting refined Russian oil.
- Despite these changes, global crude oil prices have remained stable, showing that markets are not expecting major supply issues for now.
