By Aditi S Bade
India is getting ready to dramatically reduce its direct crude oil imports from Russia starting
from the end of November as a reaction to U.S. sanctions against Moscow’s top oil
producers, Rosneft, and Lukoil, which will be effective from November 21.
New Delhi has found itself caught in a very intricate predicament, to say the least. Russia
has managed to be one of the principal oil suppliers to India, but the U.S. has taken India
under its sanctions which are aimed at reducing the import of Russian oils to the Indian
market. A maritime-intelligence company named Kpler has forecasted that the volume of
direct Russian crude to Indian refiners would drop significantly in the month of December.
The reports are suggesting that the largest Indian refiners including Reliance Industries,
Mangalore Refinery and Petrochemicals Ltd, and HPCL Mittal Energy Ltd are already in the
process of either reviewing or suspending contracts with Rosneft and Lukoil which account
for the majority of India’s Russian crude imports through the first half of 2025.
What is the reason for the haste? The U.S. has imposed sanctions on the Russian oil
companies such that any oil company involved with the Russian ones can easily become a
target for secondary sanctions imposed by the U.S. Hence, the Indian refiners are in a
dilemma whether to continue purchasing through intermediaries or to stop sourcing from
Russia completely.
The shift in India’s energy policy is already apparent: U.S. crude imports to India hit the
highest level since March 2021 in October, at about 568,000 barrels per day, while Russian
oil purchases are still under consideration. Analysts, on the other hand, warn that even
though direct imports may decline, Russian oil could still enter the market through
complicated trade routes or third-party re-exports rather than simply being extinguished.
From a macroeconomic point of view, the transition is in line with India’s strategy to secure
its energy supply amidst global instability. In the wake of international sanctions on Russia,
Indian refiners are diversifying their sources of supply by procuring oil from the Middle East,
Latin America, West Africa and North America, among others.
There are still some risks involved in the transition. The logistics and freight costs for crude
oil from non-Russian sources might increase, and the refining industry might experience
unpredictable changes in its economics. December arrival of certain cargoes already
committed makes immediate shifting difficult.
Additionally, there are diplomatic aspects. India has to balance its ties with Russia that has
been an ally and the U.S. that is a new partner at the same time. The reduction in imports
from Russia, be it the whole or a significant part, is a signal for Delhi’s willingness to be
flexible amidst altered sanctions and global oil-market dynamics.
To sum up, India will have cut its direct imports from Russia by 50% by December in
compliance with U.S. sanctions and as an indirect result of its strategy to diversify its
sources. Although the oil from Russia will not completely disappear right away, the trade
pattern is changing, and Indian refiners are adapting to a new sourcing scenario.