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Informist, Saturday, Oct. 25, 2025

 

By Ashutosh Pati

 

MUMBAI – The latest sanctions on Russian oil majors, which led to a sharp rebound in prices of crude oil, have turned market participants worried about a major disruption to global supply if the Kremlin is unable to divert its oil flows. This could lead to a further rise in oil prices if India stops purchasing oil from Russia, according to analysts.

 

The US' Treasury's Office of Foreign Assets Control Wednesday imposed sanctions on Open Joint Stock Company Rosneft Oil Co. and Lukoil OAO, two of Russia's largest oil companies. These sanctions were due to Russia's lack of commitment to end the war in Ukraine and were aimed at exerting pressure on the country's energy sector, while degrading its ability to raise revenue for its war machine and support its weakened economy, the US government department said in a press release. These sanctions are set to come into effect from Nov. 21.

 

The European Union has also banned imports of some Russian refined products, including diesel, gasoline, and certain fuel oils. "The risk of buyers being penalised for transacting with Rosneft and Lukoil is a concern for the market and threatens a large portion of Russian oil supply," Warren Patterson, head of commodities strategy at ING, said in a note.

 

Crude oil prices, which were trading in a broad range for a few months before falling below the $60-per-barrel mark this month, jumped around 6% Thursday. The sanctions also come at a time when the market has been concerned about oversupply amid higher supply from the Organization of the Petroleum Exporting Countries and its allies.

 

"Oil prices surged this week, with Brent trading near $66 a barrel and WTI below $62, marking their biggest weekly gain since June after the US imposed sweeping sanctions on Russia's top producers Rosneft PJSC and Lukoil PJSC, disrupting global crude flows and stoking fears of supply shortages," Riya Singh, research analyst, commodities and currency at Emkay Global Financial Services, said.

 

Rosneft and Lukoil together produce over 5 million barrels per day of crude oil, which is almost half of Russia's total production, according to ING. "...these sanctions have the potential to be very disruptive to the oil market," Patterson said.

 

Meanwhile, India, one of the largest buyers of Russian crude, is looking to move away. India's oil-to-chemicals conglomerate Reliance Industries Ltd. will fully comply with the new restrictions announced by the European Union, the UK, and the US on import of crude oil from Russia and exports of refined products to Europe, Informist reported late Friday. "We will comply with the EU's guidelines on the import of refined products into Europe. Whenever there is any guidance from the Indian Government in this respect, as always, we will be complying fully. Reliance has consistently aligned itself with the objectives of ensuring India's energy security," said a company spokesperson.

 

"Recalibration of Russian oil imports is ongoing and Reliance will be fully aligned to GOI (government of India) guidelines on the extent of recalibration," the company said in response to a query by Reuters on whether it plans to cut its crude imports from Russia.

 

Media reports suggest India could buy more oil from West Asia and the US in the coming months as it prepares to lower imports from Russia. West Asian nations such as Iraq, Saudi Arabia, and the United Arab Emirates are some of the major oil suppliers to India.

 

In September, India's crude oil imports from Russia declined over 6% on month and 17% on year to 1.6 million barrels per day, according to global trade data and analytics firm Kpler. Crude oil imports from Iraq, Saudi Arabia, and the UAE in September rose around 7% on month and over 2% on year to 2.1 million barrels per day. Of this, Iraq was India's second-largest supplier, supplying 904,000 barrels per day of crude oil, followed by the UAE at 609,000 barrels per day, and Saudi Arabia at 606,000 barrels per day, according to Kpler.

 

In the past, Russia has managed to continue its oil flows despite sanctions. "There is still plenty of uncertainty over how much Russian oil supply will be disrupted by these latest sanctions, and as a result, there is significant uncertainty about what this means for the oil balance and prices," Patterson said.

 

Before the sanctions, ING had a bearish view on the oil market and expected Brent crude to average $57 per barrel over 2026. Patterson said that they were "holding back from making any revisions" to their forecasts till more clarity on the exact impact of the sanctions on global oil flows.

 

"However, the shift seen from the Trump administration and the risk of further sanctions suggest that the floor for the market could end up being somewhat higher," Patterson said. If Russian flows become increasingly disrupted and all supply to India halts, "we could see a scenario where Brent trades up to the $70-$75/bbl range".

 

"If Russia fails to find alternative buyers, demand for non-Russian oil would rise and the looming oversupply on the oil market would be correspondingly lower," Carsten Fritsch, commodity analyst at Commerzbank, said in a note.

 

China is another major buyer of oil from Russia and has been importing high amounts of oil to fill up its strategic reserves. Media reports suggest that state refiners in China have backed out of some oil purchases following the announcement of the sanctions, Patterson said. "If both India and China scale back purchases, the reallocation of trade flows could trigger another leg higher in oil prices, particularly if Russian exports stumble amid shipping or financing bottlenecks," Emkay's Singh said.

 

Meanwhile, OPEC and its allies are set to meet on Nov. 2 to decide production levels for December, with the market anticipating another hike in output. "Concerns about Russian export shortfalls are likely to support prices, even if speculation about a further increase in oil production in December will intensify again next week in the run-up to the next meeting of the eight OPEC+ producer countries," Barbara Lambrecht, commodity analyst at Commerzbank, said in a note.  End

 

US$1 = INR 87.85

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Avishek Dutta

 

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