Indian refiners are likely to ramp up crude oil purchases from the Middle East, Latin America and the US to compensate for reduced imports from Russia, following Washington’s sanctions on two major Russian producers, sources and analysts said.
The US government, on October 22, imposed sanctions on Russia’s two largest crude oil producers, Rosneft and Lukoil, barring all American entities and individuals from conducting business with them. Non-US firms could also face penalties if found dealing with the sanctioned companies or their subsidiaries. The US Treasury Department said all existing transactions involving Rosneft and Lukoil must be wound down by November 21.
Russia currently supplies nearly a third of India’s crude imports, averaging around 1.7 million barrels per day (mbd) in 2025, of which approximately 1.2 mbd came directly from Rosneft and Lukoil. Most of these volumes were bought by private refiners, Reliance Industries Ltd and Nayara Energy, with smaller allocations to state-owned refiners.
Russian crude flows are expected to remain in the 1.6–1.8 mbd range until November 21, but direct volumes from Rosneft and Lukoil are likely to decline thereafter, as Indian refiners seek to avoid any risk of US sanctions, said Sumit Ritolia, Lead Research Analyst (Refining and Modelling) at Kpler.
Reliance, which has a 25-year term contract with Rosneft to buy up to 5,00,000 barrels per day of crude, may be the first company to do so, sources said.
Nayara, which is currently dependent solely on Russian oil after supplies from elsewhere dried up due to sanctions by the European Union, has very few options.
“Nonetheless, refiners will continue sourcing Russian grades through third-party intermediaries, which remain unsanctioned, though with heightened caution,” Ritolia said.
To compensate for reduced direct Russian inflows, Indian refiners are expected to increase procurement from the Middle East, Brazil, Latin America, West Africa, Canada, and the United States. “However, higher freight costs could erode arbitrage opportunities and limit large-scale substitution”, he added.
Echoing similar views, Prashant Vasisht, Senior Vice President and Co-Group Head, Corporate Ratings, Icra Limited, said pivoting away from Russian oil will lead to a rise in India’s import bill.
“The sanctions by the US on certain Russian crude oil producers are likely to impact the purchases by India, as these suppliers accounted for about 60 per cent of the volumes purchased.
“While India can substitute the purchases from Russia with suppliers from the Middle East and other geographies, the import bill for crude oil would increase. On an annual basis, the replacement by market-priced crude would lead to an increase in import bill by less than 2 per cent,” he said.
Russia’s exports – about 7.3 million barrels a day, according to the International Energy Agency – account for about 7 per cent of global crude oil and refined fuel consumption. The latest penalties on Rosneft and Lukoil, combined with sanctions imposed earlier this year, mean that firms shipping the majority of Moscow’s oil to overseas markets are now blacklisted.
Ritolia said historically risk-averse, state-owned oil refiners have already been purchasing minimal Russian volumes and are likely to further reduce direct transactions with sanctioned entities to mitigate exposure to secondary sanctions related to shipping, insurance, and financial channels.
They will, however, continue indirect purchases through intermediaries where feasible.
“The largest importer of Russian grades, Reliance Industries Ltd (RIL), faces the most immediate challenges. With its term contracts with Rosneft now affected, RIL will need to shift towards third-party spot buying, reworking its supply and financial chains to ensure compliance with OFAC rules while maintaining operational continuity,” he pointed out.
The company is expected to front-load liftings (whatever is maximum possible because transit time would be limiting) before enforcement deadlines and later pivot to indirect trade structures, reducing direct imports from sanctioned entities.
“A plausible scenario is that RIL 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 as new shell companies and trade channels emerge. But overall, more diversification is expected from the world’s most complex refiner,” he said.
Nayara Energy, already under sanctions, is expected to continue its Russian crude imports as usual. It is effectively fully dependent on Russian crude already.
Unless New Delhi steps in with direct pressure, Nayara’s operations and sourcing pattern are unlikely to change materially, he added.
Overall, Indian refiners are likely to diversify their import baskets, increasing inflows from Latin America (Brazil, Argentina, Colombia, Guyana), West Africa, and the Middle East. While near-term imports of Russian crude may dip, starting with December loadings, Russian barrels are expected to continue reaching India through intermediaries.
India’s refineries are among the most flexible globally and can handle a wide range of crude grades, Ritolia said.
“Even with 30 per cent of the crude slate coming from Russia, refiners still process diverse barrels – from heavier Basra Medium, Maya, and Castillata: Vasconia to lighter WTI, Agbami and Arab Extra Light. The operational challenge is minimal; the economic trade-off (loss of discounts) is the bigger issue.
“Despite the near-term turbulence, a complete ban on Russian crude imports by Indian refiners remains highly unlikely, given the compelling margins and geopolitical stance,” he said.
“Unless Indian refineries themselves are sanctioned, or the Government of India formally restricts Russian crude – both unlikely scenarios – Russian oil will continue to flow to India (volume may see a dip in the near to short term), albeit through more complex financial, logistical, and trading structures.”
Published on October 24, 2025
