EU sanctions on Russian crude to harm Indian fuel exporters

The European Union's delayed ban-effective January 21 next year-on fuels made from Russian crude offers temporary relief, but its restrictive definition of such fuels could pose a challenge to Indian exporters.

On Friday, the EU announced its latest package of sanctions on Russia, which included restrictions on imports of fuels refined from Russian crude-potentially impacting Reliance Industries, a major importer of Russian oil and a significant exporter of fuels to Europe.

Shares of Reliance Industries closed 3.3 per cent lower at ₹1,428.20 on Monday, even as the benchmark BSE Sensex ended 0.5 per cent higher, after some brokerages reported that the company's earnings missed their estimates. Reliance had reported a 78 per cent year-on-year jump in quarterly profit to ₹26,994 crore on Friday.

The EU published the legal text over the weekend to clarify how its latest raft of sanctions would be implemented. Importers shall have to provide "evidence of the country of origin of the crude oil used for the refining of the product in a third country," the legal text states."Petroleum products imported from third countries which were net exporters of crude oil in the previous calendar year shall be considered to have been obtained from domestic crude oil and not from crude oil originating in Russia, unless a competent authority has reasonable grounds to believe that they have been obtained from Russian crude oil," the legal text states.This leaves room for interpretation that fuel exports from India-a net importer of crude oil-could fall under the scope of the ban. Further complicating the picture is India's position as one of the top two importers of Russian oil.

The European Commission will issue guidance on the kind of evidence importers must provide to prove the origin of crude.