Indian refiners may buy more oil from West Asia after Russia sanctions

Indian refiners will likely lean on Iraqi Basrah Medium, a type of crude oil, barrels to replace lost Russian grades

Indian refiners may procure additional crude oil supplies from West Asia, including Iraq, Saudi Arabia, and the UAE, after the US slapped sanctions on two major Russian oil firms, Rosneft and Lukoil, according to analysts.

 

Viewed as the strictest measure by the US government against Russia since the Ukraine war started in 2022, the sanctions are expected to limit Indian refiners’ purchase of crude oil from Moscow. Of the total Russian oil volumes coming into India, around 60-70 per cent is supplied by the two sanctioned firms.

 

“India and Turkey are likely to cut imports (of Russian oil) from the current levels of nearly 2 million barrels per day (bpd) while evidence of Chinese state-owned companies cancelling Russian purchases will further support buying of Middle Eastern medium sour grades,” said Janiv Shah, vice president-commodities markets at Rystad Energy.

 

Refiners will likely lean on Iraqi Basrah Medium, a type of crude oil, barrels to replace lost Russian grades. India already sources significant volumes of crude oil from West Asia. Iraq supplies around 20 per cent of New Delhi’s oil imports while Saudi Arabia and the UAE account for 12 per cent and 10 per cent, respectively.

 

The Organisation of Petroleum Exporting Countries (Opec) is well-positioned to meet additional Indian demand as the group has been boosting production in 2025. 

 

Opec and its allies (Opec+) fully reversed its 2.2 million bpd voluntary cut in September to regain lost market share.

 

The 12-member oil cartel, Opec, which produces 40 per cent of the total global oil, includes Iraq, Saudi Arabia, the UAE, and Kuwait, among others, while the larger group Opec+ includes Russia.

 

“India already has term contracts or spot mechanisms and logistics in place for most of these (Middle East, West Africa and the US) regions, so diversification is technically feasible, though not cost-neutral. Right now, I feel energy security takes centre stage, with refining economics also at play,” said Sumit Ritolia, lead research analyst for refining and modelling at maritime intelligence firm Kpler.

 

According to news agency Bloomberg, Reliance Industries Limited (RIL) bought millions of barrels of crude oil from West Asian countries, including Saudi Arabia, Iraq and Qatar, and the US after Washington sanctioned Russian oil majors.

 

RIL holds a long-term contract to purchase nearly 500,000 bpd of crude oil from Rosneft. Indian state-run refiners have no term deals with Moscow, and they rely majorly on spot cargoes arranged through intermediaries.

 

Public sector oil firms include Indian Oil Corporation Ltd (IOCL), Bharat Petroleum Corporation Ltd (BPCL), and Hindustan Petroleum Corporation Ltd (HPCL), while Reliance and Nayara Energy — which is 49 per cent owned by Rosneft — dominate the private refinery segment.

 

“Historically risk-averse, state-owned oil marketing companies (OMCs) have already been purchasing minimal Russian volumes, and are likely to further reduce direct transactions with sanctioned entities to mitigate exposure to secondary sanctions related to shipping, insurance, and financial channels. They will, however, continue indirect purchases through intermediaries where feasible,” said Ritolia.

 

Meanwhile, White House Press Secretary Karoline Leavitt on Friday said India has begun "scaling back" its oil purchases from Russia at the "request" of US President Donald Trump, according to news agency PTI. Announcing the sanctions against Russian oil, Trump had claimed that India would bring down Russian oil imports to nearly zero by the end of 2025.