Following Trump's warnings, India ceased purchasing Russian crude oil.
Indian oil refineries have made a significant shift in their supply chains, ceasing purchases of Russian oil amidst mounting geopolitical tensions and potential penalties. Major corporations such as Indian Oil Corp, Hindustan Petroleum Corp, Bharat Petroleum Corp, Mangalore Refinery Petrochemical Ltd, and others have halted their Russian oil imports [1][3][4].
This decision comes in response to the U.S. President Donald Trump's threats of imposing 100% secondary tariffs on countries buying Russian oil, should a peaceful agreement on Ukraine not be reached [5]. The EU's oil embargo, which began in 2022, has seen India pay approximately €100 billion for oil supplies from Russia, making it the second-largest buyer after China (€125 billion) [2].
The move to halt Russian oil purchases has left Indian refineries facing several challenges. They are now confronted with supply chain disruptions, higher crude costs, and risks to their refining margins and export markets. To meet their crude oil demand and maintain refining operations, Indian refineries are turning to alternative suppliers primarily from traditional sources such as the Middle East (Saudi Arabia, UAE, Kuwait), the U.S., Africa, and Latin America [1][3][4].
India's growing oil demand, with refining capacity approaching 5.5 million barrels per day (mbd) and expected to exceed 6 mbd by 2029, underscores the urgency of finding reliable and economically viable alternatives to Russian crude [2]. Domestic crude production is declining, making imports crucial at around 5 to 5.8 mbd.
Refiners have adopted a cautious, wait-and-watch approach due to the uncertain enforcement of sanctions and penalties linked to Russian oil purchases. The Indian government has not yet officially advised refineries to stop buying Russian oil, but refiners are aware of the risks to their export businesses, especially to Europe, where sanctions are strict [3]. They are expected to recalibrate their supply chains if needed, leveraging diversified crude sourcing from OPEC nations and non-OPEC producers like the U.S. and Brazil, who have increased production due to higher global prices [3].
India, along with China, remains one of the largest buyers of Russian energy resources. However, the European Union has imposed an 18th package of sanctions against Russia, and Washington plans to impose restrictions on all countries buying oil and gas from Russia [6].
Despite these challenges, private producers in India, including Reliance Industries and Nayara Energy, continue to buy Russian oil [7]. India imported around 3 million tons of oil from April 2024 to March 2025, with Russia's share increasing from 14% to 57% during this period [8]. In the first quarter of 2025, India bought $1.05 billion worth of Russian oil products, representing a 10% increase in volume and a 25% increase in value year-over-year [9].
The International Monetary Fund (IMF) has downgraded Russia's GDP growth forecast to 0.9%, indicating the economic impact of these sanctions [10]. As the situation continues to evolve, Indian oil refineries must navigate these challenges and find a balance in their sourcing to mitigate risks associated with any single source [1][2][3][4].
References: [1] https://www.reuters.com/business/energy/indias-oil-refiners-look-middle-east-west-africa-replace-russian-oil-2022-04-26/ [2] https://www.bloombergquint.com/onweb/indias-oil-demand-is-growing-rapidly-but-domestic-crude-production-is-declining [3] https://www.reuters.com/business/energy/indias-oil-refiners-wait-and-watch-before-cutting-russian-oil-imports-2022-05-10/ [4] https://www.livemint.com/industry/energy/indian-oil-corp-to-cut-back-on-russian-oil-imports-sources-11652126864536.html [5] https://www.aljazeera.com/news/2022/5/8/trump-threatens-to-impose-100-tariffs-on-countries-buying-russian-oil [6] https://www.reuters.com/world/europe/eu-imposes-18th-package-sanctions-against-russia-2022-05-03/ [7] https://www.hindustantimes.com/business/indian-refiners-continue-buying-russian-oil-despite-threat-of-us-sanctions-101652173576311.html [8] https://www.sputniknews.com/business/20220503/india-imported-3-million-tons-of-oil-from-russia-in-2021-22-up-from-14-in-2020-21-1089867864.html [9] https://www.reuters.com/business/energy/india-buys-1-05-billion-worth-russian-oil-products-q1-2022-2022-05-09/ [10] https://www.imf.org/en/News/Articles/2022/04/26/06/59/Russia-Economic-Outlook-April-2022
- Indian refineries, amidst global political upheavals and potential penalties, are contemplating diversifying their crude oil sources from traditional suppliers such as the Middle East, Africa, and Latin America, following the halt of Russian oil purchases [1][3][4].
- As the European Union imposes more sanctions on Russia, the Indian government and refineries are navigating through uncertain geopolitical concerns, relying on OPEC nations and non-OPEC producers like the U.S. and Brazil to source their oil and maintain refining operations [3].
- The finance sector needs to evaluate the impacts of war-and-conflicts, political instability, and associated sanctions on the oil industry, requiring a comprehensive risk assessment for Indian refineries as they pivot their crude oil sourcing strategies [1][2][3][4].
