Reliance Industries (RIL), India's largest buyer of Russian crude oil, is making a bold move that could reshape its global standing. In a strategic pivot, RIL has drastically cut its Russian crude imports and is preparing to halt purchases from sanctioned entities altogether. But here's where it gets controversial: is this a genuine commitment to compliance, or a calculated maneuver to protect its lucrative Western markets? Let's dive in.
Recent data from Kpler, a leading global analytics provider, reveals a sharp decline in Reliance's crude imports. In October, the company's daily imports plummeted to 534,000 barrels, a 24% drop from September and 23% below the April-September average. The Russian share of these imports shrank to 43% in October, down from 56% in September. This shift isn't just about numbers—it's about timing. Russian oil shipments received in October were ordered in August, reflecting the typical two-month lag between procurement and delivery. Meanwhile, Nayara Energy, backed by Russia's Rosneft, has doubled down on Russian crude, sourcing 100% of its requirements from Russia last month.
And this is the part most people miss: To offset the reduced Russian supplies, RIL has significantly ramped up imports from the Middle East. Saudi Arabian volumes surged by 87%, while Iraqi supplies increased by 31%. Together, these regions accounted for 40% of Reliance's total imports in October, up from 26% in September. Even more striking, U.S. crude imports doubled, reaching nearly 10% of Reliance's total intake, compared to just 5% in September.
So, why is RIL making such dramatic changes? According to an ET report, the October reduction wasn't directly caused by the recent U.S. sanctions on Rosneft and Lukoil, Russia's top oil exporters. Instead, it stems from earlier pressures, including the Trump administration's aggressive tactics, punitive 50% tariffs on Indian exports imposed in late August, and EU sanctions announced in July (effective January 2024). These measures have created a complex web of constraints for RIL, particularly since Rosneft is contractually obligated to supply the Indian refiner with approximately 500,000 barrels per day.
Here’s the real kicker: Continuing to buy from sanctioned entities could expose RIL to secondary sanctions—a risk it simply can't afford. “RIL just can't afford to violate sanctions. It has too much exposure to the U.S.,” a source told ET, highlighting the company's deep ties with major U.S. tech investors. RIL plans to stop crude shipments from sanctioned Russian entities after the November 21 deadline for the U.S. sanctions wind-down period. However, the company could resume Russian oil imports if international restrictions are lifted in the future.
Officially, Reliance has pledged to adhere to international sanctions. A recent EU clarification offers some flexibility: refiners can export fuels to Europe even if they import Russian crude, provided they can prove that the exported petroleum products come from a 'production line' using non-Russian oil. For refineries unable to segregate Russian crude, exports to the EU remain possible if they demonstrate the absence of Russian oil in their production line over the preceding 60 days.
But here's the controversial question: Is RIL's shift a principled stand against sanctions, or a strategic move to safeguard its Western market access? And what does this mean for India's energy security and its relationship with Russia? Let us know your thoughts in the comments below!
