India’s Russian oil buy to dwindle

New Delhi: India is likely to begin scaling back its crude oil purchases from Russia under an agreement reached with the United States in exchange for lower trade tariffs, sources said, adding that these imports will continue for now, as refiners like Nayara Energy have limited alternatives.

US President Donald Trump on Friday signed an executive order rescinding a punitive 25 per cent duty on all imports from India, saying the move followed New Delhi’s commitment to stop imports of Russian oil.

While Indian refiners, which process crude oil into fuels such as petrol and diesel, have not received any formal directive to halt Russian purchases, they have been informally advised to begin scaling back buys from Moscow, three sources with knowledge of the matter said.

Most refiners will continue to honour purchase commitments made before the announcement – orders typically placed six to eight weeks in advance – but will not place new orders thereafter, they said.

Hindustan Petroleum Corporation Ltd (HPCL), Mangalore Refinery and Petrochemicals Ltd (MRPL) and HPCL-Mittal Energy Ltd (HMEL) had stopped buying oil from Russia soon after the US last year slapped sanctions on Moscow’s key exporters, while others like Indian Oil Corporation (IOC) and Bharat Petroleum Corporation Ltd (BPCL) will wind down their purchases, sources said.

Reliance Industries Ltd, India’s biggest buyer, which late last year paused purchases after US sanctions on Rosneft and Lukoil, is also likely to cease purchases after its resumption cargo of 1,50,000 barrels is delivered in the next couple of weeks.

The only exception to this rule is likely to be Nayara Energy. Nayara was first sanctioned by the European Union and then by the UK for its Russian links (Rosneft holds 49.13 per cent in Nayara). Because of these sanctions, no other major supplier is willing to do any commercial transaction with the company, resulting in it being forced to buy Russian oil from non-sanctioned entities.

While the Oil Ministry has refused to comment on the issue, the Commerce Ministry and the Ministry of External Affairs have not directly commented on commitments made by India with regard to Russian oil purchases.

Sources said India’s oil imports from Russia have been on the decline since the US sanctions on Rosneft and Lukoil came into effect.

In December 2025, they averaged 1.2 million barrels per day, down from a peak of USD 2.1 million barrels per day in May 2023. In January, they further came down to USD 1.1 million barrels, and the expectation was that they may decline to less than USD 1 million this month or the next. With the new understanding with the US, the imports may halve soon.

India meets about 90 per cent of its crude oil needs through imports, and purchases of discounted Russian oil – sold at lower prices after Western countries imposed sanctions on Moscow over its invasion of Ukraine in February 2022 – have helped reduce its import costs.

Nayara, sources said, is likely to continue purchases of Russian oil from non-sanctioned entities in the near future.

The refinery’s unique position was explained to US trade officials during talks in December, they said, adding that Nayara may have to be given an exemption from the ‘no-Russian oil-buy’ policy or a special dispensation be created.

According to Sumit Ritolia, Lead Research Analyst, Refining and Modeling at Kpler, the India-US trade deal announced is unlikely to result in a near-term reduction in India’s Russian crude imports.

“Russian volumes remain largely locked in for the next 8-10 weeks and continue to be economically critical for India’s complex refining system, supported by deep discounts on Urals relative to Brent. Imports are expected to stay broadly stable in the 1.1-1.3 million barrels a day range through Q1 and early Q2,” he said.

“Despite a recent moderation in purchases, India is unlikely to fully disengage in the near term.”

Prashant Vasisht of Icra said the US-India trade deal reportedly includes India stepping up purchase of US crude oil and potentially start buying oil from Venezuela.

“For the Indian refining sector, there are ample avenues, including the US, to purchase crude as Russian crude accounted for less than 2 per cent of Indian crude imports prior to FY2023.”

The discounts on Russian crude oil were marginal prior to the US announcing sanctions on some Russian crude suppliers in October 2025, and Icra estimates that replacement of Russian crude with market-priced crude would lead to an increase in the import bill of the country by less than 2 per cent.

Additionally, Venezuelan crudes are heavy and sour and therefore, cheaper and would be of interest to Indian refiners, many of whom can process these types of crudes, he added.