The BRICS TimesCheap Russian oil has been a major profit source for Indian refiners for two years. It kept retail petrol and diesel prices stable despite global market volatility.
Experts believe India’s Russian oil imports will drop sharply soon after new US sanctions fully start. These sanctions target key Russian crude oil exporters. However, experts note that the flow of oil will not stop completely.
Sanctions on Rosneft, Lukoil, and their owned companies began on November 21. Buying or selling crude oil from these firms is now nearly impossible. India imported an average of 1.7 million barrels per day this year. This may rise to 1.8–1.9 million barrels in November as refiners rush to buy. But supply will likely fall steeply in December and January. Experts predict imports could drop to around 400,000 barrels per day.
Rising Reliance on Russian Oil
India traditionally relied on West Asian crude oil. After the Ukraine war started in February 2022, India began buying Russian oil in bulk. Russia sold crude at deep discounts due to Western bans and low European demand. Consequently, Russian oil imports in India jumped from 1% to nearly 40% of total imports. Russia remained India’s top supplier in November, covering about one-third of total imports.
Decline Certain in Winter Months
Sumit Ritolia, an analyst at Kpler, shared his views on the situation. He said, “We expect a clear decline in Russian crude flows to India in the near future, especially in December and January. Supply has slowed since October, but it is too early to draw a final conclusion given Russia’s intermediaries and alternative financial handling capacity.”
Reliance Industries, HPCL-Mittal Energy, and Mangalore Refinery have paused Russian oil imports after US sanctions. The only exception is Nayara Energy, which is backed by Rosneft. It relies heavily on Russian oil due to a lack of options after European bans. Ritolia noted that apart from Nayara, no Indian refiner wants to risk dealing with OFAC-designated entities. Buyers need time to rearrange contracts, supply routes, and payment channels.
Impact on the Indian Market
Cheap Russian oil has boosted profits for Indian refiners over the last two years. This kept fuel prices stable in India despite international chaos. India meets 88% of its oil needs through imports. Now, Russian oil imports face an uncertain phase as US sanctions take full effect. Experts say the supply won’t stop but will definitely see a sharp decline.
