India's imports of Russian crude oil, the key feedstock for fuels like petrol and diesel, are expected to drop sharply in the near term as new US sanctions on Moscow’s top oil exporters, Rosneft and Lukoil, take full effect. The sanctions, effective from November 21, have effectively turned crude linked to these companies into a “sanctioned molecule,” limiting Indian refiners’ ability to purchase directly from them.
Near-term supply disruptions
India's crude oil imports from Russia have averaged 1.7 million barrels per day (bpd) this year, with November arrivals projected at 1.8–1.9 million bpd as refiners rushed to maximise discounted purchases before the cutoff. Analysts, however, expect flows to fall sharply in December and January, potentially dropping to around 400,000 bpd. Refiners such as Reliance Industries, HPCL-Mittal Energy, and Mangalore Refinery have temporarily halted imports, while Rosneft-backed Nayara Energy remains the only exception due to its heavy dependence on Russian crude.
Non-sanctioned suppliers still accessible
The US sanctions target specific companies rather than all Russian oil, meaning crude from non-sanctioned producers like Surgutneftegaz or Gazprom Neft can still be legally imported, provided no sanctioned intermediaries, vessels, banks, or services are involved. Analysts note that Russian oil itself is not banned, allowing Indian refiners to source via alternative channels.
Refiners reassess strategies
The discounted Russian crude has helped Indian refiners, both public and private, post record profits and stabilise domestic fuel prices despite international volatility. However, refiners now face uncertainty in navigating compliant pathways, including secure shipping, banking, and intermediary arrangements. Reliance Industries, for instance, stopped importing Russian crude into its Jamnagar SEZ refinery on November 20 to comply with upcoming EU rules, although pre-committed cargoes will still be processed in its domestic facility.
Diversifying sources amid volatility
To offset potential shortfalls, Indian refiners are expected to increase imports from the Middle East, Latin America, West Africa, and North America. Analysts warn that the trajectory of Russian imports will depend on the strictness of Western enforcement and any further sanctions targeting all Russian barrels or buyers who process them.
While a complete halt in Russian imports is unlikely, the market is entering a period of heightened uncertainty. Discounted Russian barrels remain attractive for margins, and India’s energy policy prioritises affordability and security over geopolitical pressure. Analysts predict that Russian crude will continue to flow to India, though through more diversified and less transparent channels.
(PTI inputs)
