While India’s imports of Russian oil declined by 24% on year in July, the drop in inward shipments by the Eurasian country was more pronounced among state-run refiners, while private-sector companies sought to keep the pace of imports.
Indian refiners now seem to be increasing their intake of US WTI crude and Middle Eastern barrels.
Analysts say the drop in imports reflect maintenance shutdowns, demand and heightened compliance sensitivity amid mounting geopolitical risk.
Private refiners, who account for over 50% of Russian crude intake, have also begun reducing exposure, with fresh procurement diversification underway as concerns over US sanctions intensify, notes Sumit Ritolia, Lead Research Analyst, Refining & Modeling at Kpler. By how much the two sets of companies have reduced the intake of Russian oil could not be immediately ascertained.
Indian refiners now seem to be increasing their intake of US WTI crude and Middle Eastern barrels.
India’s import of Russian oil had touched a two-year high of 2.1 million barrels per day in June, as per data provided by Kpler. The imports decreased by 23% from 2.09 million barrels per day in July 2024.
Private Refiners Also Begin to Diversify
Private refiners, who account for over 50% of Russian crude intake, have also begun reducing exposure, with fresh procurement diversification underway as concerns over US sanctions intensify, notes Sumit Ritolia, Lead Research Analyst, Refining & Modeling at Kpler.
As per the data, oil imports from Iraq rose by 8.7% to 908,000 barrels per day in July from the previous month while that from Saudi Arabia increased 21% to 702,000 barrels per day.
Volumes from the United States climbed 20% on-month to 364,000 barrels per day in July, touching an 11-month high, highlighting India’s ongoing diversification efforts and price-driven arbitrage.
In the weeks ahead, India’s complex private refiners are expected to pivot toward non-Russian barrels from the Middle East, West Africa, Latin America, or even the US, where economics permits, as per Kpler.
“This shift, while operationally feasible, will be gradual and strategically aligned with evolving regulatory frameworks, contract structures, and margin dynamics. Importantly, India’s ability to rebalance its crude slate without triggering a margin shock underscores the adaptability of its refining sector—but it also signals the beginning of a more fragmented and compliance-driven procurement environment,” Ritolia said.
Geopolitical Tensions and Cost Pressures Rising
US President Donald Trump has announced a 25% tariff on India with additional penalties for buying Russian oil – a move could severely disrupt Indian supplies while also resulting in a potential increase in the country’s oil import bill as the country will lose its access to discounted barrels.
Experts say that it is unlikely that Indian refiners will voluntarily halt Russian crude imports in the absence of a clear government directive. Russian barrels—particularly Urals—offer a combination of technical compatibility, favorable yield profiles, and strong refining margins that make them an attractive feedstock within the current refining slate.
A web of permutations and combinations is being explored behind the scenes, with active consultations underway between government ministries, suppliers, and refinery planners, as per industry players. The challenge is not just to keep crude flowing, but to do so without blowing a hole in margins or destabilizing product economics.
India, on Monday, strongly responding to the US, said that the targeting of India is unjustified and unreasonable. The Ministry of External Affairs said that India would take all necessary steps to protect its national interests and economic security.
Russian crude continues to trade at a meaningful discount to Middle Eastern OSP-linked grades, helping refiners maintain margin resilience, as per analysts. This cost advantage has been central to India’s refining and fuel export competitiveness over the past two years.
“In line with past episodes—such as during the US sanctions on Iran in 2018—refiners are expected to adopt a diversification strategy, gradually rebalancing their crude basket to include more barrels from West Africa, Latin America, and the US, without completely phasing out Russian supply,” Ritolia said.
This approach allows for risk hedging without compromising on refinery economics, and positions refiners to respond quickly should government policy shift or secondary sanctions escalate, he added.
According to data from Kpler, the average landed cost of crude from non-Russian sources during April–May 2025 was approximately $5 per barrel higher than that of Russian-origin barrels. Although the steep discounts seen in early 2022 have narrowed over time, Russian crude still ranks among the most economically attractive grades in India’s import portfolio.
Kpler noted that even a modest $5-6/bbl spread and expectation of further increase in flat prices and premium on 1.7–2.0 million b/d equates to billions (many) in annual savings—a critical buffer that has helped the Indian government manage inflation, rein in the fiscal cost of fuel subsidies, and maintain refinery profitability amid global uncertainty.
India has maintained that it will continue to buy Russian crude, as per reports. Russian crude is not formally sanctioned under Indian law—unlike Iranian and Venezuelan grades, which public-sector refiners avoid due to explicit compliance concerns.
In the interim, refiners are maintaining operational flexibility. “With diverse crude compatibility across Indian refining systems and sufficient logistical access to alternative grades—ranging from the Middle East to West Africa and Latin America—refiners believe they can pivot their crude slate further, should a directive from the government necessitate it,” said Ritolia.