NEW DELHI – India’s state-owned oil refiners haven’t bought Russian crude oil in about a week. This is a big and sudden change in one of Moscow’s strongest energy connections since the war in Ukraine began. Reuters was the first to disclose this news, which comes from knowledgeable sources. It means that India is changing its oil import strategy in a big way, as it used to rely largely on cheap Russian crude.
The state-owned oil companies Indian Oil Corporation (IOC), Hindustan Petroleum Corp (HPCL), Bharat Petroleum Corp (BPCL), and Mangalore Refinery and Petrochemical Ltd (MRPL) are said to have stopped buying Russian crude oil. Four people who know about the refiners’ procurement plans told the news agency this. The Indian refineries and the central government have not yet made an official remark on the matter.
Pressure from the US and less money to be made
India is the world’s third-largest oil importer and a key source of income for Russia while it fights in Ukraine. It has been the biggest client of Russian crude oil that comes by sea. Russia, on the other hand, became India’s main oil supplier, providing about 35% of India’s total crude imports in recent years.
There are a number of reasons why purchases have stopped:
Narrowing Price Discounts: The economic case for India to buy Russian oil has greatly eroded as price discounts on Russian crude have dropped to their lowest levels since 2022. The substantial reductions that made Russian oil very appealing to Indian refiners are no longer as appealing.
New US Tariff Threats: President Donald Trump has told countries like India in strong terms that they should stop buying Russian oil. Trump said on July 14 that he would put 100% tariffs on countries who buy Russian oil unless Moscow makes a “grand peace agreement” with Ukraine.
The US’s growing pressure seems to be a big reason for this. India, along with China and Brazil, has been criticized by Western countries, especially the United States, for continuing to buy a lot of Russian oil. The West sees this as indirectly supporting Russia’s war operations.
India Looks for Other Suppliers During Trade Problems
Sources say that India’s state refiners are actively replacing Russia with other sources to make up for the supply gap caused by the stoppage in Russian oil shipments. This means buying more oil from the Middle East, such Abu Dhabi’s Murban crude, and West Africa’s oil from the spot market. This change could make imports more expensive and hurt Indian refiners’ gross refining margins, but it also lowers the chance of the US imposing harsh duties.
Stopping Russian oil imports is not only about commerce. Trump said on Wednesday, July 30, that there would be a 25% tax on goods coming from India starting on August 1. He also said that India could face “potential penalties” for buying Russian weapons and oil, making it clear that trade tariffs are linked to political positions. Trump also shortened the time frame for imposing secondary penalties on buyers of Russian exports from 50 days to 10–12 days on Monday, July 28. This was done in case Moscow does not agree to a peace settlement with Ukraine by August 8.
State-owned refiners, which account for more than 60% of India’s refining capacity (5.2 million barrels per day), may still be able to buy crude oil from Russia. Private Indian refiners like Reliance Industries and Nayara Energy buy crude oil from Russia on a term basis. So, their decision to stop buying fresh Russian crude oil is a big change in India’s overall oil import policy and shows how geopolitics is having a bigger effect on global energy markets.