India is likely to pivot back to discounted Russian crude with imports surging to 1.8 million barrels per day early next year after its move to Middle East sources due to US sanctions on Lukoil and Rosneft, analysts have said.
The US Treasury’s sanctions embargo against trading with the Russian companies intended to exert pressure on Moscow to end the war in Ukraine, came into effect on Friday. It forced Indian refiners, who have been some of its most loyal buyers, to scramble for alternatives.
Indian imports are forecast to drop to 1.4 million bpd in December and January, according to research company Kpler. However, the analytics firm expects a business-as-usual scenario once the initial sanctions’ scrutiny wears off, with India buying up to 1.8 million bpd in January.
About 44 million barrels of Russian crude were heading to India on 40 vessels that are set to dock at Indian ports supplying its refineries, according to Kpler data from November 21 – the day US sanctions came into force.
India is set to receive about 1.9 million bpd of crude from Russia in November alone. Industry analysts suggest India will wager on a possible trade deal with the US as well as alternative means to continue buying Russian oil as Middle Eastern crudes, while geographically accessible, are expensive for New Delhi.
India is working to secure a trade deal from the US, which has called on New Delhi to stop buying Russian crudes in exchange for reprieve from 50 per cent tariffs – among the highest in the world.
“[It is] important, of course, to keep an eye on US-India trade talks and monitor how tensions are easing. This will definitely influence the issue of India’s imports of Russian oil,” Noam Raydan, senior fellow at The Washington Institute for Near East Policy, said.
For India’s economy, which is reeling from the impact of the tariff war, with trade deficit widening to $41.68 billion last month, buying more crude from the Middle East is not a long-term solution.
Middle Eastern crudes are on average $3-$5 per barrel more expensive than Russian grades, Dylan Sim, Singapore-based lead oil analyst at energy consultancy FGE NexantECA, told The National.
Price-sensitive India, which faces budgetary constraints over importing more expensive crude, will look for alternatives, analysts say.
Kpler said in a note that the sale of Russian oil through intermediaries would widen discounts for Indian refiners even more, making Russian crudes still more attractive to prospective buyers. It estimates Russian Urals could trade at $6 per barrel below the Dubai/Oman benchmark, making it more lucrative for Indian refiners.
Mr Sim noted that while Indian refineries are well-suited to the heavier, sour Middle East grades, their price and lack of discounted options would force them back to Russian Urals eventually.
“We think that Russian crude will eventually find its way to the market after workarounds and relabelling of volumes as being exported by non-sanctioned entities,” he added.
Kpler in a recent note indicated that governments in India, China and Turkey – all big buyers of Russian crude – will nudge their refiners to minimise visible exposure.
“They won’t want their state-owned or flagship refiners buying directly from Rosneft or Lukoil if that creates compliance or reputational risk,” Kpler noted. “Continue buying Russian crude, but through intermediaries.”
For now, India has been able to make the switch to Middle Eastern grades. Reliance, India's largest refining company, which stopped buying Russian oil in October, snapped up 1 million barrels of heavy crude from Kuwait Petroleum Company through tender, according to market reports.
India’s total import of crudes from the Middle East is set to jump 6.6 per cent in November to 2.149 million bpd, from 2.016 million bpd in October, according to Kpler.
However, analysts suggest while India might continue to buy Russian barrels, its refiners will also look to diversify its sources in 2026 so they are not left scrambling once more.
“Import levels are unlikely to return to the levels seen in the past two years given rising complexities of ensuring compliance,” Mr Sim said.
New Delhi is simultaneously pushing for stronger supply assurances from Middle Eastern national oil companies, exploring options such as long-term crude purchase agreements at pre-agreed pricing to shield refiners from volatility. The move aligns with the commissioning of Hindustan Petroleum Corporation Limited’s 180,000 bpd Barmer refinery in Rajasthan later this year, a facility designed around heavy Middle Eastern feedstocks.
