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India’s overall crude imports reached a record in March as crude oil prices declined by around 6 per cent and shipments of Russian oil recovered from a 14-month low in February due to expanding discounts, according to initial estimates derived from ship-tracking data. Higher imports reflect a growing dependence on overseas suppliers to meet domestic consumption, industry officials said.
Overall imports totalled a record 5.31 million barrels per day (bpd) as Indian refiners added capacity this year while working their refineries at full capacity in the final month of the financial year to show good results, according to data as of today from market intelligence agency Kpler and industry officials.
India imported 1.91 million bpd of Russian crude in March, 30 per cent higher than in February and flat from a year earlier.
Discounts on Russian oil have expanded by about half to around $2.50 per barrel from January, Indian refining officials said. Expanding discounts, coupled with greater availability of Russian crude, increased purchases in March, the officials said.
The Indian crude oil import basket averaged $72.3 per barrel in March compared to $77.3 per barrel in February, leading to higher purchases, according to oil ministry data and refining officials. Lower oil prices have boosted marketing margins on transport fuels to Rs 8-9 per litre, treble the breakeven levels and adequate to cover any losses from selling liquefied petroleum gas below market rates, according to analyst reports.
India’s overall crude imports may rise further in April, while Russian supplies are expected to remain stable, according to industry officials and algorithmic predictions by Kpler. State-run refiner Hindustan Petroleum added at least 100,000 bpd of refining capacity in 2024-25 (FY25) at its Vizag refinery.
Overall crude oil imports will remain strong in the 2025-26, as Hindustan Petroleum is set to start a new 180,000 bpd refinery at Barmer, and Indian Oil Corporation (IndianOil) will add 200,000 bpd capacity at Panipat, increasing India’s total refining capacity by around 8 per cent to 5.4 million bpd.
Russia accounted for around 36 per cent of India’s imports in March compared to 30 per cent in February, Kpler data showed. Russian supplies ate into Iraqi shipments, with Iraq accounting for only 17 per cent of supplies compared to 22 per cent in February. Iraq, an Organization of the Petroleum Exporting Countries (Opec) member, has reportedly cut output to compensate for exceeding its Opec quotas over the past year. India imported 300,000 bpd of US oil, double February’s volume, accounting for around 5 per cent of India’s overall imports.
Reliance Industries imported a record 605,000 bpd from Russia under a term contract with Russian state-owned producer Rosneft. The refiner has overtaken IndianOil as the country’s biggest buyer of Russian crude, with dependence on discounted Russian oil increasing, especially after cheap Venezuelan supplies slowed to a trickle due to US sanctions.
Russia gets its act together
Top Indian refining executives directly involved in crude imports told Business Standard that Moscow regained control over its oil exports after stringent US sanctions on January 10 targeted top Russian oil producers, insurers, traders, and 183 tankers, disrupting flows in February. Russian officials had assured representatives from IndianOil, Bharat Petroleum, and Hindustan Petroleum (HPL) at the India Energy Week in Delhi in February that they were working on solutions.
Over 100 tankers that are not subject to Washington’s sanctions are now supplying Russian oil to India. A few fall under UK and European Union sanctions, but those are primary in nature and do not affect India. US sanctions, however, are secondary and impact buyers of oil and the banks facilitating payments for Russian oil, industry officials said.
India expects Russian oil supplies to remain at March levels or even increase in the coming months, an official from the crude import team of a state refiner said. A trader had forecast higher shipments in March in an interaction with Business Standard at the end of February.
Discounts on Russian oil, calculated off the European benchmark Brent on a delivered basis, have been volatile in recent months due to geopolitical factors, Indian traders said. Average discounts on delivered Russian oil in FY25 were lower by $3-4 per barrel compared to the previous financial year, averaging $4.5-5 per barrel.
Top executives from IndianOil had told analysts during the latest earnings call that discounts on Russian oil had plunged by more than half to below $2 per barrel after the outgoing US administration of Joe Biden imposed crippling sanctions in early January.
A senior Indian Oil executive told Business Standard that discounts shrank for February deliveries because Russia struggled to move its oil, leading to tighter supplies and higher demand. Moreover, increased purchases of spot Middle Eastern crude by Chinese refiners, IndianOil, and HPL had trebled premiums on United Arab Emirates grades like Murban to over $6 per barrel in January, making Russian crude competitive despite lower discount levels.
