Indian banks comply with US Russia sanctions targeting Rosneft and Lukoil, as refineries pause Russian crude purchases to safeguard Western ties, a U.S. Treasury official confirmed on Thursday in Washington.
Compliance Accelerates Amid Deadline Pressure
Indian banks are actively severing ties with sanctioned Russian entities to avoid secondary penalties. A senior U.S. Treasury official noted that banks in India and China recognise the risks and prioritise relations with the West. “They are risk averse, do recognise the importance of the relationships with the West, and are moving to comply,” the official stated during a briefing.
This shift follows sanctions imposed by the Trump administration last month on Russia’s largest oil producers, Rosneft and Lukoil. The measures aim to deprive Moscow of revenues funding its war in Ukraine, now in its fourth year. Companies face a Friday deadline to wind down transactions, prompting immediate action from Indian financial institutions.
State-run and private banks have blocked payments for cargoes linked to Rosneft and Lukoil.
One refinery source revealed that banks refused to process deals involving sanctioned suppliers, forcing cancellations. Reliance Industries, India’s top private refiner, confirmed it aligns with government guidelines. “Recalibration of Russian oil imports is ongoing and Reliance will be fully aligned to GOI guidelines,” a company spokesperson said.
Data from the International Energy Agency shows India imported 1.9 million barrels per day of Russian crude in the first nine months of 2025, accounting for 40% of Russia’s seaborne exports. This volume, often bought at discounts of $12.2 per barrel below Brent, helped stabilise India’s energy costs.
US Treasury Indian Banks Rosneft Lukoil Compliance in Focus
The U.S. Treasury’s actions mark the first direct sanctions by President Trump against Russia since his January inauguration. A Treasury spokesperson emphasised the impact: “The sanctions are starving Putin’s war machine and the department is prepared to take further action if necessary to end the senseless killing in Ukraine.”
Indian banks, including those handling trade finance for oil imports, now scrutinise documents to ensure no links to Rosneft or Lukoil. Private banks, reliant on U.S. dollar clearing, lead the compliance drive.
Foreign governments and private sectors have reached out to the Treasury for guidance on severing ties. This outreach underscores the global ripple effects, with Indian entities among the most proactive.
Impact US Sanctions Indian Oil Imports: Prices Plunge, Costs Rise
Russian oil prices have plunged as major Indian buyers comply ahead of the deadline. Urals crude, Russia’s key grade, traded at a $20 discount to Brent in recent weeks, but compliance fears have widened spreads further.
India’s oil consumption hit 265.7 million metric tonnes in 2025, up 3.7% year-on-year. Russian supplies met up to 40% of needs, offering savings estimated at $6-7 billion annually through discounts. Now, refiners face higher costs from alternative sources.
Reliance cut orders from sanctioned firms by 13% in October 2025, boosting imports from Saudi Arabia to 87% of monthly needs and Iraq to 31%, raising their combined share from 26% to 40%. State refiners like Mangalore Refinery and Petrochemicals Ltd and HPCL-Mittal Energy Ltd plan to halt Russian purchases entirely.
The U.S. actions triggered an 8% rise in global Brent prices, projecting a $6-7 billion hike in India’s annual import bill. Operational costs for refineries could spike 2%, per analysts at the Carnegie Endowment for International Peace.
Indian refiners paused new Russian orders since the sanctions announcement, turning to spot markets. Bharat Petroleum Corp plans a tender for December cargoes from non-sanctioned sources. Indian Oil Corp issued a similar call for supplies. Nayara Energy, 49% owned by Rosneft, faces complications but falls below the 50% ownership threshold for direct sanctions. It buys from Rosneft yet must navigate bank restrictions.
Indian Refineries Adjust to Trump Russia Sanctions: Diversification Underway
Refineries adjust to Trump Russia sanctions by diversifying suppliers. U.S. crude imports reached their highest since 2022, with volumes surging post-sanctions. Middle Eastern barrels from Saudi Arabia and Iraq fill the gap.
The Economic Times reported that Indian refiners await government clarity while boosting spot purchases. “It all depends on banks,” one official noted, highlighting finance as the bottleneck.
Carnegie analysis details the strategic pivot: Moscow’s discounts catalysed a shift, with Russian imports rising to 35.8% in FY 2024-25. Sanctions reverse this, forcing a return to pricier benchmarks.
President Trump claimed India agreed to reduce purchases to “almost nothing” by year-end, though New Delhi denies coercion. The measures target companies, not states, allowing India to frame compliance as voluntary. Ukrainian President Volodymyr Zelenskyy welcomed the sanctions as “very important” but called for more pressure on Moscow.
Why Indian Banks Comply with US?
Since Russia’s 2022 invasion of Ukraine, India emerged as the top buyer of discounted seaborne crude. Imports jumped from negligible levels to 2.07 million barrels per day last month, per Kpler data. This filled gaps left by Western embargoes.
The Trump administration’s frustration peaked over summer, leading to an August tariff doubling U.S. duties on Indian goods to 50%. This punished sectors like textiles and pharma, tying energy policy to trade talks.
Sanctions on Rosneft and Lukoil, supplying over 60% of India’s Russian crude, hit hardest. State refiners rarely bought directly but routed through intermediaries; now, all chains face scrutiny.
What’s Next: Broader Trade and Energy Shifts
Indian banks comply with US Russia sanctions will reshape South Asia’s energy landscape. Refineries eye long-term deals with U.S. and OPEC producers, potentially stabilising prices but raising bills.
Trade negotiations with Washington could ease if compliance holds, lifting tariffs. Yet, reliance on imports 90% of needs exposes vulnerabilities. India may accelerate domestic exploration and renewables to cut exposure.
The November 21 deadline looms; post-compliance monitoring by Treasury could target non-adherents. Moscow may reroute oil to unsanctioned entities, prolonging adjustments.
In South Asia, Pakistan and Bangladesh, minor Russian buyers, watch closely. Regional stability hinges on steady supplies, with India’s moves influencing neighbours’ strategies. This compliance underscores the leverage of U.S. financial systems, compelling even non-aligned nations to align on sanctions.
Published in SouthAsianDesk, November 21st, 2025
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