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Reliance Industries turns away Sovcomflot oil cargoes

India is not a signature to the oil price cap implemented by the US, the UK, the rest of the G7, Australia and the EU in December 2022 (crude) and February 2023 (refined products). However, the US Treasury, via the Office of Foreign Assets Control (OFAC) has been ramping up the pressure in recent months, and Indian imports of Russian crude have declined significantly since then.

Now Reliance Industries, operator of the world’s biggest refining complex, has said that it would not be buying Russian oil loaded on tankers operated by shipper Sovcomflot (SCF), reported Reuters, citing two unnamed persons familiar with the situation.

Russian oil firms have been facing difficulties finding ships to sell their surplus crude oil. Recent Ukrainian drone attacks on Russia’s refineries have compelled Russia to adjust its mix of crude vs refined exports. Banking restrictions have also made it harder for Russian companies to collect payments for oil exports, although progressive dedollarization of the global economy (partly a result of US sanctions and threats to companies using the US banking system should they be found to have contravened US sanctions, even if the companies themselves have no links to the USA apart from using its financial system to process international trades).

In February this year the US imposed sanctions on 14 crude oil tankers involved in Russian oil transportation.

Reliance has been a large buyer of Russian Urals oil, but it has now requested that the new supplies not be shipped by Sovcomflot-operated tankers, said Reuters, citing unnamed sources.

Meanwhile, more Indian refiners were reported to be planning to refuse the delivery of crude via Sovcomflot vessels.

Indian refiners were said to be “extra cautious” due to tighter scrutiny of Russian oil deals by banks and US authorities. The refiners want to prevent the involvement of entities that are directly or indirectly sanctioned, said Reuters, citing the same sources.

“Our preference is that refiners should not take oil in sanctioned vessels, because of our political and commercial interests and the U.S. sanctions,” one of the sources in India’s government told Reuters.

One trader in the Russian oil market told Reuters that more Sovcomflot vessels were committed for voyages to China now. “SCF actively offer their vessels, but traders are wary of fixing any as buyers and even ports may reject the cargo”, the trader said.