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NEW DELHI/SINGAPORE/TOKYO: US and European pressure on Asian buyers of Russian energy could restrict India’s oil imports from December, leading to cheaper supplies for China, while Japan is unlikely to halt its Sakhalin liquefied natural gas shipments for now, trade sources and analysts said.
Washington is exerting pressure on China, India and Japan through trade talks to reduce their purchases of Russian oil and LNG, while Britain has just imposed sanctions on Chinese and Indian entities. More sanctions from the European Union could follow. Western nations say Moscow is using its energy revenues to fund the Ukraine war.
The moves come after Russia ramped up crude exports this month as Ukrainian drone attacks on its refineries have reduced oil processing. China and India’s seaborne imports of key Russian crude grades are expected to rebound to about 3.1 million barrels per day in October, the highest volume since June, data from analytics firm Kpler showed.
These imports are expected to remain high through November given the sharp rise in exports from Russia, Kpler’s senior oil analyst Muyu Xu said.
“However, the sudden UK sanctions on Chinese and Indian refineries — and the possibility of more measures from the EU or even the US — could prompt buyers to take a more cautious approach when placing new orders until further clarification emerges,” she added.

INDIA CUTS NOT YET VISIBLE
A White House official said on Thursday that Indian refiners are already cutting Russian oil imports by 50 percent. Indian sources said the cut was not visible yet, though it could be reflected in import numbers for December or January. Refiners had already placed orders for November loading that included some cargoes for December arrival as well, multiple sources said.
“We do not think India can stop Russian crude purchases overnight, even if it has agreed to do so, as at least 700,000 bpd of India imports of Russian crude are on a term basis,” consultancy FGE said in a note.
“Therefore, the maximum volume of Russian crude flows to India we see as potentially being at risk in the short term is the 0.8-1 million bpd of spot volumes that Indian refiners take,” FGE analysts said. China could pick up some of the volumes backed out of India as Russian crude discounts will widen further, they added.
Meanwhile, Indian refiners have bought rare Guyanese crude as they diversify purchases that would mitigate the impact on their operations if Russian supply was cut.

SANCTIONS ON NAYARA, YULONG
Britain slapped sanctions on India’s Nayara refinery, which is already reeling from EU sanctions, and on Chinese refiner Yulong Petrochemical which operates a 400,000 barrels per day refinery in China’s eastern Shandong province.
The UK government has given Yulong until November 13 to complete outstanding transactions, allowing the refiner to handle its upcoming Middle Eastern imports, Kpler’s Xu said.
It’s unclear if Yulong can establish a new supply chain to circumvent the sanctions, she added.
“The move has undoubtedly sounded an alarm for other Russian oil buyers who may have previously overlooked sanctions from non-US authorities,” Xu said.
June Goh, a senior oil market analyst at Sparta Commodities, said the UK sanctions are unlikely to significantly impact Yulong, but the refiner will find it hard to maintain operations if the EU and the US follow suit.
Meanwhile, Taiwan’s Russian naphtha imports are set to fall after a group of non-governmental organizations criticized the island’s continued business with Russia.
However, Ukrainian attacks on Russian energy infrastructure, as well as a partial ban imposed by Moscow on Russian exports of gasoline and diesel, have already been capping Russian refined product shipments, traders said.

JAPAN LNG IMPORTS
The US has also called on Japan to halt Russian energy imports, ahead of US President Donald Trump’s expected visit to Asia later this month.
Tokyo has agreed with other G7 countries to phase out Russian oil imports in response to Moscow’s 2022 invasion of Ukraine, but it has exemptions to continue importing LNG from the Sakhalin-2 project under long-term contracts.
An early termination of these contracts would result in various penalties, said Yuriy Humber, CEO of Tokyo-based consultancy Yuri Group. Also, securing an additional 6 million metric tons of LNG annually on the spot market to replace Russian supply would not be easy and is “massively expensive,” he said.
Russian LNG, which accounts for about 9 percent of Japanese imports, is an important stable supply source for Japan, Kingo Hayashi, chairman of Japan’s Federation of Electric Power Companies, told reporters on Friday, adding that Japanese utilities want to continue using it.
Anne-Sophie Corbeau, a researcher at Columbia University’s Center on Global Energy Policy, said the US needs to have a consistent and coherent policy on Russian LNG.
“On the one side, they are pressuring their allies to stop importing Russian gas or LNG. But they are not implementing their own sanctions on Arctic LNG 2,” she said, referring to Russia’s large-scale LNG project in northern Siberia which is still delivering LNG to China despite being under US sanctions.