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Petroleum

India's Refiners Prepare for Reduced Russian Oil Supplies Amid US Sanctions

Strategic Insights

— 1 min read

As the US imposes fresh sanctions on Russian oil producers Rosneft and Lukoil, Indian refiners are bracing for a reduction in crude imports from Moscow. To compensate for the reduced volumes, Indian refiners, particularly Reliance Industries, are preparing to scale up crude oil purchases from the Middle East, Latin America, and the United States. While the sanctions may temporarily disrupt India's access to cheaper Russian barrels, analysts expect refiners to adapt quickly by diversifying supply routes, even if it means facing higher costs and narrower margins in the short term.

Key Takeaways:

  • Indian refiners, particularly Reliance Industries, are expected to adjust their sourcing to compensate for reduced Russian volumes, with potential increases in purchases from the Middle East, Latin America, and the United States.
  • Reliance Industries, which holds a 25-year term contract with Rosneft, is expected to shift towards third-party spot buying and rework its supply and financial chains to ensure compliance with OFAC rules.
  • Nayara Energy, heavily reliant on Russian crude, is expected to maintain its current sourcing pattern, unless under direct pressure from the Government of India.
  • The sanctions by the US on certain Russian crude oil producers are likely to impact the purchases by India, with these suppliers accounting for about 60% of the volumes purchased.
  • The import bill for crude oil in India is expected to increase by less than 2% on an annual basis, due to the replacement of Russian crude with market-priced crude from other sources.
  • Reliance Industries faces the biggest adjustment challenge, with a plausible scenario being that the company temporarily halts direct purchases from Rosneft or Lukoil, leading to a sharp drop in Russian crude inflows in December, followed by a gradual recovery by mid-to-late Q1 2026.

Statistics:

  • Russia currently supplies nearly 1/3 of India's crude needs, averaging 1.7 million barrels per day (mbd) in 2025.
  • Russian crude shipments to India are expected to stay within the 1.6-1.8 million barrels per day range until November 21.
  • Reliance Industries holds a 25-year term contract with Rosneft to purchase up to 500,000 barrels per day.
  • Nayara Energy faces limited options for sourcing non-Russian crude.

Sources:

  • [P.T.I. (news agency) with Sumit Ritolia, Lead Research Analyst (Refining and Modelling) at Kpler]
  • [P.T.I. with Prashant Vasisht, Senior Vice President and Co-Group Head, Corporate Ratings, ICRA Limited]

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