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Some large Indian refiners, both private and state-owned, haven’t placed orders to buy Russian oil loading after December 5, the day on which the EU embargo and the attached price cap mechanism on Russian oil are set to enter into force, Reuters reported on Wednesday, citing sources with knowledge of the refiners’ plans.
Indian conglomerate Reliance Industries, which operates the world’s largest refining hub Jamnagar, as well as state-held Bharat Petroleum, haven’t sought to buy Russian oil after December 5, waiting for clarity about how the price cap would apply and whether there would be some fallout for buyers of Russia’s crude after the sanctions kick in, according to Reuters’ sources.
Reliance Industries is wary of ordering cargoes of Russian crude due to its exposure to the banking system in the West, the sources said.
Some other Indian refiners are ordering Russian crude for after December 5, but according to Reuters’ sources, cautiousness prevails among Indian buyers until they get more details on how exactly the price cap would apply and whether there would be enough non-Western maritime transportation services available for cargoes.
Chinese buyers have also slowed down purchases of Russian crude oil amid uncertainty about the price cap and the EU embargo, traders told Reuters earlier this week.
While considering the parameters of the price cap, the U.S. Treasury issued at the end of October guidance that says Russian crude oil loaded onto a vessel at the port of loading for maritime transport prior to December 5 will not be subject to the price cap if the oil is unloaded at the port of destination before January 19, 2023.
India and China are currently Russia’s top crude oil buyers.
Before the Russian invasion of Ukraine, India was a small marginal buyer of Russian crude oil. After Western buyers started shunning crude from Russia, India became a top destination for Russian oil exports alongside China.
Russia is even estimated to have overtaken OPEC heavyweights Iraq and Saudi Arabia to become the largest crude oil supplier to India in October, with record shipments of 946,000 barrels per day (bpd).
By Michael Kern for Oilprice.com
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Michael Kern is a newswriter and editor at Safehaven.com and Oilprice.com,