For much of last year, discounted Russian oil made up the lion’s share of Indian purchases, a financial lifeline for Moscow that also shaved billions off New Delhi’s import bill. Then came US threats, tariffs, sanctions — and months of disruption.
But against the expectations of many in the market, those Russian flows have proved remarkably resilient. With discounts widening and a US trade deal still elusive, the new normal could include significant purchases well into 2026.
The world has “become more challenging, in spite of the fact there is no shortage of energy globally,” Indian Oil Minister Hardeep Puri said on Friday, at an event marking the country’s most high-profile gathering of energy officials, to be held in Goa this week. The Russian crude quandary is likely to be a key topic of conversation, along with the coming global gas supply surge and a nuclear renaissance.
The market, Puri added, is the determining factor for India’s oil moves.
Washington’s pressure has of course made itself felt. India, which took most of its crude from the Middle East until the invasion of Ukraine in 2022, has sought to rebalance, edging back to some of those traditional suppliers. Bharat Petroleum Corp. is among those that have sought to lock in long-term Middle East volumes, with tenders issued for Abu Dhabi’s Murban, Iraqi Basrah and Oman crude. Indian Oil Corp., meanwhile, has expanded purchases in the spot market.
But with the price of benchmark Urals crude for India on the decline as a result of US sanctions on major producers, Russian purchases are hard to resist. Even Reliance Industries Ltd., which has so far taken a conservative approach, has placed new orders for non-sanctioned cargoes.
IOC, BPCL, as well as sanctioned refiner Nayara Energy Ltd., continue to buy Russian crude.
“We know that oil will always find a way,” said Arne Lohmann Rasmussen, chief analyst at A/S Global Risk Management. “The combination of US sanctions and the EU ban on products derived from Russian crude is taking a toll on imports and is increasing demand for non-sanctioned crude. But I strongly doubt that India will give up importing Russian oil.”
At the peak, India was taking more than 2 million barrels a day, a level that fell to around 1.3 million barrels a day in December, a figure that’s likely to remain stable this month. But analysts and traders involved in the purchases say the flow is very unlikely to drop to near zero as many forecast back in October, after the US blacklisted Russian crude giants Rosneft PJSC and Lukoil PJSC.
India is likely to “maintain a healthy baseload of Russian crude,” said Naveen Das, senior crude oil analyst at analytics firm Kpler Ltd., along with expanding dealing with Middle Eastern suppliers and exploring growth opportunities like non-sanctioned Venezuelan barrels.
“India will continue to look out for the best prices and best margins for its refiners, strategically changing its buying slate while also dropping Russian imports slightly as it already has done.”
There are only a handful of reasons for that dynamic to change, beyond continued challenges to Russia’s own exports, including from Ukrainian attacks.
One is a looming trade deal between India and the United States. Should a final agreement be signed, that could prompt New Delhi to take a more conservative stance. US President Donald Trump said at the World Economic Forum in Davos last week that the two countries would have a good trade deal, but provided no detail.
Another is the need to tend to other trade and political relationships, beyond long-standing ties with Russia — and New Delhi’s desire to continue diversifying sources of supply as refining capacity continues to expand. According to government forecasts, that figure could rise to 309.5 million tons a year by 2030 from 258 million tons today. Puri said last week that India now has 41 sources of supply, up from 27 a few years ago.
Finally, India’s options have increased substantially with the global oil market in a glut — even if other barrels are not coming at a discount.
“What is key to remember is that in a world of oversupplied oil currently,” said Kpler’s Das, adding the world’s third-largest oil importer had a “fair amount of optionality” and would not be punished for cutting back on Russian purchases. “India is still one of the key demand hubs.”
India Energy Week runs from Jan. 27 to Jan 30.
