(MENAFN- KNN India) New Delhi, Jul 30 (KNN) Indian oil refiners face potential major disruption to their European exports following the European Union's implementation of its 18th sanctions package against Russia on July 18, according to a new report by ICRA.

The sanctions package includes a comprehensive import ban on refined petroleum products manufactured from Russian crude oil by third countries, with notable exceptions for Canada, Norway, the United States, the United Kingdom, and Switzerland.

The measures directly impact countries including India, Turkey, and the United Arab Emirates, which have emerged as significant processors of discounted Russian crude oil and major suppliers of refined products to European markets in recent years.

Indian refiners collectively exported approximately USD 14.3 billion worth of petroleum products to the EU during fiscal year 2024-2025, highlighting the substantial financial stakes involved.

India has established itself as a key refiner of Russian crude oil over the past three years, capitalising on substantial discounts that previously ranged from USD 10-16 per barrel.

While these price advantages have recently narrowed to USD 2.5-4 per barrel, ICRA analysis suggests that the newly implemented price caps and related measures could potentially restore wider discount margins.

The growth in India's petroleum product exports to Europe has been dramatic, reaching an annual average of USD 14-15 billion over the past three years.

This surge was largely attributed to reduced Russian supplies to European markets, creating significant opportunities for Indian refiners to fill the supply gap.

Beyond the import restrictions, the EU has implemented additional financial pressure mechanisms by lowering the crude oil price cap from USD 60 per barrel to USD 47.6 per barrel, bringing it in line with current global oil pricing.

The sanctions package also introduces a dynamic mechanism for future price cap reviews and expands restrictions on transportation and insurance services for Russian oil traded above the established limits.

The sanctions framework has been further strengthened through the addition of 105 vessels to the sanctioned list, bringing the total to 444 vessels now subject to port access restrictions and maritime transport service bans.

These vessels are prohibited from accessing EU ports and related maritime services.

Indian refiners have responded to the evolving sanctions landscape by ceasing business relationships with sanctioned entities and traders.

Despite the comprehensive nature of these measures, crude oil prices have remained relatively stable, with market analysts interpreting this as an indication that global supply disruptions are expected to be minimal.

The stability in oil pricing occurs against the backdrop of Russian oil exports representing approximately 7 percent of global liquid fuel consumption, according to the ICRA report.

This suggests that while the sanctions represent a significant policy shift, market participants anticipate that alternative supply arrangements and existing stockpiles will prevent major supply shortages in the near term.

(KNN Bureau)

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