IOC to continue Russian oil imports despite new US sanctions, cites compliance clarity

The Indian Oil Corporation (IOC) has confirmed that it will continue its imports of Russian crude oil despite new US sanctions targeting specific Russian oil companies. The company clarified its position following additional measures taken by the United States last week, aimed at increasing pressure on Moscow by imposing sanctions on entities such as Rosneft and Lukoil amid the ongoing conflict in Ukraine. These sanctions have led Indian refiners to pause new contracts while they assess compliance risks, but IOC leadership has maintained that crude oil purchases will continue if they are fully compliant with international requirements.

Anuj Jain, the IOC’s chief financial officer, explained the company’s position during a recent post-earnings call with analysts. “We will not stop at all (buying Russian crude) as long as we abide by the sanctions. Russian crude is not subject to sanctions. The entities and shipping lines are the ones that have been sanctioned,” he said, reiterating that the legal framework allows trade to continue provided that parties and shipping arrangements are not blocked.

Jain further explained the operational approach, noting, “If someone comes to me with a non-sanctioned entity, the cap (price) is met, and the shipping is OK, I will still buy it.” This indicates the IOC’s commitment to adhere to all specified regulatory restrictions while maintaining a stable supply of crude oil from Russia, a major exporter for the company.

The latest sanctions specifically targeted Rosneft, Lukoil, Surgutneftegas PA and Gazprom Neft. Rosneft, India’s largest supplier, manages about 45 percent of the country’s Russian crude oil imports by acting as a collector rather than a direct producer, allowing supplies from non-sanctioned entities to be sourced to Indian refineries. Industry officials highlight that “refiners can still buy Russian crude through non-sanctioned intermediaries, many of whom operate out of Dubai or Singapore.”

IOC president Arvinder Singh Sahni confirmed that it “will abide by all sanctions imposed by the international community,” underscoring the company’s compliance-focused approach. However, he did not comment on whether discounted Russian oil, which made up 21 percent of the IOC’s crude oil consumption in the fourth quarter, would be affected in the near term. The broader market is also observing the impact of sanctions on supply channels, with private refiners such as Reliance Industries and Nayara Energy expected to face different impacts depending on their exposure and sourcing strategies.

Despite the restrictions, economic incentives to import Russian crude remain strong. Industry officials state that discounted Russian oil is currently trading at $3.5-5 per barrel below global standards. Market reactions to the sanctions were weak, with one expert noting that “the market’s muted reaction – with oil prices rising by just $2 a barrel after the sanctions – suggests that traders believe that much Russian oil will continue to flow through alternative, non-sanctioned channels.”

(With agency input)