As new sanctions by the US on Russian crude oil entities come into effect from November 21, India’s imports of Russian crude may finally be forced to take a sharp decline, say analysts.
Despite India’s purchases of Russian crude oil – from which petrol and diesel are made – remaining firm in October, the country’s crude oil import landscape may be entering a period of uncertainty, forcing refiners, including Reliance Industries, which is the world’s biggest buyer of seaborne Russian crude, to reassess their Russian supply channels.
US sanctions on Rosneft and Lukoil – Moscow’s top oil exporters – and their majority-owned subsidiaries, took effect on November 21, effectively turning crude linked to these firms into a “sanctioned molecule”.
“We expect a noticeable drop in Russian crude flows to India in the near term, particularly through December and January. Loadings have already slowed since October 21, though it is still early for definitive conclusions, given Russia’s agility in deploying intermediaries, shadow fleets, and workaround financing,” said Sumit Ritolia, Lead Research Analyst, Refining & Modeling, Kpler, a data and analytics platform.
India’s crude oil imports from Russia averaged 1.7 million barrels per day (bpd) this year, with November arrivals projected at 1.8-1.9 million bpd. But flows may drop noticeably in December and January, with analysts estimating near-term declines to around 4,00,000 bpd.
Traditionally reliant on Middle Eastern oil, India increased its imports from Russia from a meagre 1 per cent to nearly 40 per cent following the February 2022 Ukraine invasion, when Western sanctions and reduced European demand forced Russia to offer its ample crude oil to allies at massive discounts.
In November, Russia continued to be India’s top supplier, making up for about a third of all crude oil imported by the country.
The discounted Russian crude helped Indian refiners – both public sector Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) as well as private sector Reliance Industries Ltd – to make bumper profits in the last two years.
Also Read: India’s Russian oil purchase unchanged in Oct
However, with the US getting actively involved as a self-styled mediator in ending Russia’s war in Ukraine, it tightened the noose around Moscow’s oil exporters in a bid to cut off Russia’s major financiers, which the US claimed were helping fund the war.
India too had an additional 25 per cent tariffs imposed on its exports for purchasing Russian oil. The sanctions have resulted in companies like Reliance Industries, HPCL-Mittal Energy Ltd and Mangalore Refinery and Petrochemicals Ltd to halt imports for now.
In fact, Reliance Industries confirmed it stopped importing Russian oil into its 7,04,000 bpd export-oriented SEZ refinery on November 20 to ensure compliance with upcoming EU rules banning fuels derived from Russian crude.
From December 1, all product exports from the Jamnagar SEZ unit will be derived exclusively from non-Russian crude. Reliance will, however, honour pre-committed Russian cargoes placed before the October 22 sanctions announcement, routing any post-deadline arrivals to its separate 6,60,000 bpd domestic-market refinery.
The company declined to clarify whether it would continue buying non-sanctioned Russian crude for the domestic facility, reiterating only that it would comply with all sanctions.
The only exception buying Russian crude for now is Rosneft-backed Nayara Energy, which is majorly dependent on Russian crude after supplies from the rest of the world were effectively cut off, following European Union sanctions on it.
“Based on the current understanding, no Indian refiner, other than Nayara’s already-sanctioned Vadinar facility, is likely to take the risk of dealing with OFAC-designated entities, and buyers will need time to reconfigure contracts, routing, ownership structures, and payment channels,” Ritolia said.
Firms are also considering bypassing US sanctions by purchasing crude from non-designated Russian entities, for example, Surgutneftegaz, Gazprom Neft, or independent traders using non-sanctioned intermediaries, since the sanctions don’t include all Russian oil or all Russian producers.
So, Indian refiners can still buy Russian oil as long as no sanctioned entity, vessel, bank, or service provider is involved.
“Russian oil itself is not sanctioned; the suppliers are. That is why non-designated producers can legally step in to fill part of the gap created by the restrictions on Rosneft and Lukoil,” Ritolia said.
The analyst said Russian barrels will not disappear from India’s slate, only flows are expected to decline sharply in the near term and grow more opaque as Moscow and Indian buyers adjust to tightening restrictions.
“In the longer term, the trajectory will depend on how strictly Western nations enforce secondary sanctions and whether further measures – such as sanctioning all Russian barrels or penalising refineries that process any Russian crude – are introduced,” Ritolia said.
While cheaper Russian crude helped India keep retail petrol and diesel prices stable despite volatility in the international market, on which India is 88 per cent dependent to meet its oil needs, refiners are expected to increase procurement from the Middle East (Saudi Arabia, Iraq, UAE and Kuwait), Latin America (Brazil, Guyana, Colombia and Argentina), West Africa and North America (the US and Canada), Ritolia said.
“New trading intermediaries, alternative shipowners, evolving payment mechanisms, ship-to-ship transfers, and a shift toward ‘clean’ (non-designated) sellers will all shape post-November trade,” he noted.
Until refiners gain clarity on compliant pathways – including secure non-sanctioned counterparties, shipping and insurance availability, and workable banking solutions – India’s imports from Russia will remain in choppy waters, marked by short-term disruptions (lower arrivals) and frequent shifts in sourcing patterns, he added.
India’s energy policy continues to prioritise affordability and security over geopolitical pressure. Unless secondary sanctions directly target Indian buyers or New Delhi imposes formal restrictions – both low-probability scenarios – Russian crude will keep flowing to India, though via increasingly diversified and less transparent channels, Ritolia said.
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