India's crude security holds as refiners pivot from sanctioned suppliers

With the November 21 deadline now past, India's Russian crude inflows are easing but not collapsing as refiners pivot to non-sanctioned suppliers, tap alternatives and benefit from soft global prices

The story of India’s oil imports from Russia is playing out rather less dramatically than feared, now that the November 21 deadline for countries to stop importing oil from Russian entities such as Rosneft and Lukoil has passed. 

The question of Western sanctions on Russian oil imports is set to figure prominently when President Vladimir Putin arrives in India today on a high-profile, 30-hour visit. India’s oil imports soared when Russia began offering discounted crude to get around Western sanctions imposed following Russia’s February 2022 invasion of Ukraine.

 

But energy-hungry India must now taper its Russian oil imports following mounting Western pressure.   

Fortunately, a variety of factors have come into play to ensure that while it is not ‘business as usual’ on Russian oil imports, predictions of a major hit to supplies or price shocks have not come true either. 

Factors in favour of India’s energy security include the option and freedom to source oil from non-sanctioned Russian entities, continuing handsome discounts on Russian crude, the possibility of securing not-so-costly oil from other regions like West Asia and Africa, and subdued global oil prices. 

As far as November is concerned, Russian arrivals remained very strong, averaging 1.8 million barrels per day (mbpd) and accounting for more than 35 per cent of India’s total crude imports. Before November 21, imports were closer to 1.9-2.0 mbpd as buyers moved cargoes ahead of the deadline. Volumes have slowed since then. 

However, looking at December and January, there are clear signs of a dip in Russian exports to India. Based on current loadings and voyage activity, December arrivals are likely to be in the range of 1.0-1.2 mbpd, according to experts. This is broadly in line with the expectation that, in the short term, Russian flows could ease towards the 800,000 barrels per day (kbd) level before stabilising in a more comfortable zone.

 

“In the medium term, refiners are already adjusting to the new reality. There is a shift towards non-designated Russian entities, more use of other trading channels, and increased sourcing from the West Asia, West Africa, and the Americas. As long as broader secondary sanctions are not applied, India is likely to continue importing Russian crude, just through more indirect routes,” said Sumit Ritolia, lead research analyst at Kpler, a data and analytics firm. 

November bump 

Overall, Indian imports of Russian grade crude in November stood at a five-month high, before sanctions kicked in. This bump can be explained by a few key factors. First, front-loaded arrivals remained strong ahead of the November 21 deadline, with refiners accelerating scheduling and speeding up vessel turnarounds, particularly for Rosneft- and Lukoil-linked cargoes. 

Second, there was high domestic fuel demand and strong refinery runs during this period when Russian barrels remained the most economical incremental feedstock. Finally, refinery operations improved at Nayara Energy, which has been running almost exclusively on Russian grades. Nayara’s utilisation has picked up since September, with the company importing roughly 400,000 barrels per day of crude through November 27. Rosneft, one of the key targets of western sanctions, holds a major stake in Nayara through its subsidiaries. 

“On sentiment, refiners emphasise that Russian oil itself is not sanctioned, only certain entities are. As long as they stick to compliant, non-designated suppliers, purchases should continue. Current discounts are still attractive, which also supports ongoing demand,” Ritolia said. 

He added that refiners are diversifying supplies to offset reduced direct Russian volumes, and that because Indian refinery operations are complex, replacing Russian volumes should not create any technical impact, only reducing margins for some. 

Crude options 

Russia accounts for 35 per cent of India’s crude imports, or about 4.7 mbpd. The rest is mainly met through imports from Iraq, Saudi Arabia, the UAE, Nigeria, and Angola. It is the shortfall of 35 per cent of total crude imports that needs to be replenished from non-sanctioned Russian entities. 

“The other three alternatives are to increase imports from existing suppliers such as Iraq and Saudi Arabia or alternatively reach long-term contracts with new reliable suppliers. Or there is also a large pool of 30-35 per cent of the total world oil trade in the form of a spot market,” said Jatinder Cheema, a projects, energy and natural resources lawyer, and an expert on global energy issues. 

In order to compensate for the softer near-term Russian arrivals of crude, Indian refiners are expected to increase intake from a broader mix of suppliers in the coming months, including from Saudi Arabia, Iraq, the UAE, Kuwait, Brazil, Argentina, Colombia, Guyana, West Africa, the US, and Canada. 

The import Bill 

Interestingly, even as Russia faces new sanctions, another key player, Saudi Arabia, has made its countermove. Riyadh, through state-owned Saudi Aramco, announced a sharp reduction in the official selling price (OSP) for its crude oil destined for Asia in December. 

The premium for Arab Light over the Oman/Dubai average was cut by $1.20 per barrel, now standing at just $1.00, the lowest in many months. The Arab Medium and Arab Heavy grades were also trimmed by $1.40 each, with similar reductions across other blends. The timing of the move is crucial. The decision came right after the Opec+ group of oil-producing nations agreed to raise output by 137,000 barrels per day for December, but with a pause on further increases through the first quarter of 2026. 

“At first glance, this is just a commercial adjustment, an attempt to stay competitive in a well-supplied Asian market. But in truth, it appears to be a geopolitical play. Saudi Arabia is reclaiming lost ground in Asia, particularly in India and China, where Russian barrels had made deep inroads, particularly over the last two years,” Cheema said. 

“The price cuts are Riyadh’s signal that it intends to remain the cornerstone supplier to Asia, even if that means sacrificing margins to maintain market share. For Asian refiners, especially in India, the timing is serendipitous. With Russian supplies coming under pressure, Saudi barrels are not only accessible, but cheaper.” 

Future moves 

A key strategic aim of the Indian government is to make sure its strategic reserves are topped up, Cheema said. 

“...The government and the Indian Strategic Petroleum Reserves Ltd (ISPRL) are fast-tracking procurements to refill and expand the country’s strategic petroleum reserves (SPRs),” he said. 

“It is a calculated move — one that merges economic opportunity with geopolitical foresight. Secondly, we are in a well-supplied global market, and Russian Urals have been further discounted, opening opportunities for non-sanctioned crude.” 

Given this context, while it is likely that India’s oil imports from Russia will decrease after November 21, the decline is most likely to be temporary, allowing the supply chain to reorganise itself. What this also means is that, barring more expansive secondary sanctions, India will continue to buy from non-sanctioned suppliers of Russian oil. 

“The reasons are multiple. The geopolitical and economic dimensions are both essential. Political leaders will not want to be seen as bending down to US sanctions. At the same time, Russian barrels remain highly cost-competitive, and workarounds to maintain flows are likely to emerge. In particular, buyers may increasingly pivot to non-sanctioned Russian entities and opaque trading channels,” Ritolia said.