India is set to witness a dramatic reduction in its crude oil imports from Russia, with December projections showing a nearly 50% drop as recent US sanctions on major Russian suppliers take effect. This significant decline marks a pivotal shift in India's energy procurement strategy that had heavily relied on Russian crude since the Ukraine conflict began.
Sanctions Trigger Import Collapse
According to sector experts and global shipping data, India's imports of Russian crude oil are expected to plummet to approximately 1 million barrels per day in December, representing a sharp 47% decrease from current levels. This substantial reduction follows the US Office of Foreign Assets Control sanctions imposed on Russian energy giants Rosneft and Lukoil, which became effective on November 21.
Data from global ship tracking firm Kpler reveals that imports from Russia stood at 1.9 million barrels per day as of November 27, highlighting the severity of the upcoming decline. The sanctions specifically target two suppliers that collectively accounted for about 60% of Russia's total oil exports to India, creating a substantial supply gap that Indian refiners must now address.
Strategic Diversification Underway
Indian oil companies are already implementing contingency plans to secure alternative supplies from multiple global sources. Sumit Ritolia, lead research analyst for refining and modelling at Kpler, confirmed that refiners are aggressively shifting toward non-designated Russian entities while increasing procurement from West Asia, West Africa, and North and Latin America.
The diversification strategy includes ramping up imports from traditional suppliers such as Saudi Arabia, Iraq, UAE, and Kuwait, while also expanding sourcing from Western hemisphere producers including Brazil, Argentina, Colombia, Guyana, the United States, and Canada. This broad-based approach aims to compensate for the estimated 1.1 million barrels per day of Russian supplies that will exit the Indian market due to sanctions.
Prashant Vashisht, senior vice president and co-group head at ICRA Ltd, emphasized that this development will significantly reduce Russia's share in India's import basket below the 35-36% annual share witnessed in the last fiscal year. During FY25, India had imported 88 million tonnes of oil from Russia, establishing it as the country's top supplier since FY23.
Discounts and Adaptive Logistics Provide Cushion
Despite the supply disruption, Russian suppliers have responded by increasing discounts to approximately $6 per barrel, up from nearly $4 in October, as they attempt to maintain market share amidst shrinking buyer interest. These enhanced discounts are expected to partially offset the higher costs associated with sourcing oil from alternative, non-discounted suppliers.
Russian entities not affected by sanctions are employing sophisticated logistical workarounds, including ship-to-ship transfers near Mumbai, mid-voyage diversions, and more complex routing strategies to continue supplying the Indian market. Ritolia noted that as long as broader secondary sanctions aren't applied, India will likely continue importing Russian crude through more indirect and less transparent routes.
The current high import levels in November can be attributed to front-loaded arrivals ahead of the November 21 deadline, with refiners accelerating scheduling and speeding up vessel turnarounds, particularly for Rosneft and Lukoil-linked cargoes. Strong domestic fuel demand and robust refinery runs during the fourth quarter also contributed to the elevated import figures.
Industry analysts suggest that in the short term, imports from Russia may ease to around 800,000 barrels per day before stabilizing at that level. The combination of increased discounts and existing robust gross marketing margins for oil marketing companies due to low global oil prices and stable retail prices may actually enhance profitability for Indian refiners despite the supply challenges.
