Transcript of Firstpost interview: sanctions’ impact on Indian oil procurement from Russia

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Firstpost – Spotlight: 0:00
We begin with the fallout of the war raging in the heart of Europe between Russia and Ukraine, and its impact on the global oil trade. The war, which is just days away from its three-year mark, has brought Cold War rivals, Russia and the United States, to the edge of a direct conflict. In the latest, the United States has imposed its harshest sanctions yet on Russia’s oil industry. Two major Russian oil producers, along with 183 vessels that have shipped Russian oil, have been hit with severe sanctions. The move is aimed at targeting Moscow’s revenues that it uses to fund its war with Ukraine.

Biden: 0:44
They will have profound effect on the growth of the Russian economy and make it more difficult for Putin to conduct his wars. It is probable that gas prices could increase as much as three, four cents a gallon, but what it’s going to have a more profound impact on [is] Russia’s ability to continue to act in the way it’s acting in the conduct of war.

Putin’s in tough shape right now and I think it’s really important that he not have any breathing room to continue to do the god-awful things he’s continuing to do. And as I said, he’s got his own problems economically, significant problems economically, as well as politically at home.

Spotlight:
Not just Russia.These sanctions are also expected to directly impact Moscow’s top oil customers, India and China. Beijing is the world’s largest oil importer and New Delhi ranks third. The newly sanctioned tankers handled over 530 million barrels of Russian crude oil in 2024, about 42% of the country’s total seaborne crude exports. Out of these, around 300 million barrels were shipped to China, adding up to roughly 61% of China’s seaborne imports of Russian oil. And the bulk of the remainder went to India. India relies on Russia for about a third of its oil imports.

2:11
For the first 11 months of last year, India’s Russian crude imports rose 4.5% on year to 1.7 million barrels per day. This makes up 36% of India’s total imports. For China, the volume including pipeline supply was up 2% at 2.1 million barrels per day, which is about 20% of its total imports. Since Moscow’s invasion of Ukraine in 2022, Russia began diverting oil and fuel shipments from Europe to Asia, and both India and China have been the main beneficiaries of discounted Russian crude. But to step up in punitive measures including sanctions targeting Russian producers, insurers and vessels has thrown the trade of discounted crude into disarray.

3:03
Now these tougher sanctions on Russian oil will force Indian and Chinese refiners to diversify and to source more from the Middle East, Africa and the Americas. In December, India’s crude oil imports from West Asia, specifically Iraq and the United Arab Emirates, surged. New Delhi is already looking to replace the shortfall in supplies from its largest source market, Russia. In the same month, India’s imports of Russian crude dropped nearly 17%, sequentially to 1.4 million barrels per day, which is the lowest level in 2024. Now, harsh measures are also pushing both oil prices and freight costs up.

3:47
Earlier today, oil prices jumped after US announced new sanctions to curb Russian oil supply. Reports say that refiners, tankers, operators and traders across Asia were scrambling to manage the fallout from the latest round of sanctions that impact major importers in India and China too. So far hundreds of ships and many Russian oil traders managed to escape US sanctions. This is because the Biden administration sought to strike a balance between the case for tighter sanctions and averting a global oil price rally. But in a week from now, President-elect Donald Trump will take office and the Republican has promised to end the war in Ukraine.

4:32
Moscow depends on oil exports to not just sustain its economy but also to fund the ongoing conflict. So will harsher sanctions find a place in Trump’s strategy to achieve this goal? Now for more on this we have with us international relations and Russian affairs expert Dr. Gilbert Doctorow who is joining us live from Brussels. Welcome to Firstpost.

Gilbert Doctorow, PhD:
Yes, good day to you.

Firstpost:
Now Dr., how will the new US sanctions on Russian oil producers and maritime services affect India’s and China’s ability to secure stable oil supplies? And What challenges might they face in diversifying their supply chains to countries like the Middle East, Africa or the Americas?

Doctorow: 5:28
I appreciate the need to investigate alternative supplies. That is prudent and it may prove to be essential. However, there’s another side to the story. The sanctions that Mr. Biden has just imposed are difficult to remove. They are embedded in American legislation, and it would require an act of Congress for Mr. Trump to overturn these sanctions. However, it is also possible, and I’d say likely, that Mr. Trump will simply not enforce these sanctions. There is no ability of Congress or of any American entity to compel him to enforce these. If he were to go the way through Congress and override or reject the sanctions, then he would have a fight with Congress and he would be expending his political capital for an uncertain result.

6:32
If he simply doesn’t enforce them, then he has no problems, and he keeps on moving with the rest of his political agenda. The actions taken by Biden in the closing days of his administration are vicious, but they also are founded on very poor intelligence. It may sound peculiar to your audience, but the United States CIA and other intelligence agencies that are supplying the White House with the basic information that it uses to draw up tactical and strategic plans for its foreign affairs, foreign affairs management, they are faulty. The head of the CIA, Mr. Burns, has been denounced by CIA ex-experts, ex-employees, as lying through his teeth about the nature and status of the Ukraine war.

7:27
The plans that Mr. Biden has set down would make sense if this war will proceed to ’27 or later, which is what American plans are, as we saw at the meeting in Ramstein last week. However, the Russians will very likely complete the war in the coming months.

Spotlight: 7:46
Right. Doctor, with the sanctions targeting over 180 tankers and Russia-based maritime insurance providers, how significant is the anticipated rise in oil prices and freight costs likely to be for major consumers like India and China?

Doctorow: 8:06
I think that we have to wait a week or two. I understand that the market reacts, and must react to this very significant news that you have just described. The “Financial Times”, for example, gave a very lengthy and detailed explanation of the different aspects of these sanctions, both those that are intended to curtail Russian production by sanctioning the companies that are based in Russia, that is foreign companies that are acting in Russia, to facilitate production; and more importantly, to sanction the ships and the insurers, as you mentioned. The net result could be drastic, But I don’t believe that there will be such a net result, for the reasons I just mentioned. Mr. Trump wants to end the war.

Spotlight:
All right. Absolutely. Doctor, thank you very much for being with us on Firstpost and for your valued insights and analysis.

Doctorow: 9:04
Well, thanks for having me.