Indian oil refiners are beginning to reduce their reliance on Russian crude oil, prompted by escalating pressure from the United States following President Donald Trump’s decision to hike tariffs on Indian exports to 50%, as per Bloomberg. This strategic move is widely interpreted as a reaction to India's sustained imports of Russian crude, even as global sanctions continue to isolate Moscow.
Major public-sector companies such as Indian Oil Corporation, Bharat Petroleum Corporation, and Hindustan Petroleum Corporation have now opted to halt purchases of Russian oil from the spot market for the next procurement cycle. This decision directly impacts the buying of Russia’s Urals crude, with cargoes scheduled for loading in October now off the table. Sources with insider knowledge, who spoke to Bloomberg on condition of anonymity, confirmed that these firms are waiting for an official directive from the government before proceeding with new Russian deals.
Although no formal ban has been announced, the Indian government is reportedly re-evaluating its oil procurement strategy. In the meantime, refiners have been asked to explore other sourcing options that exclude Russian crude. Typically, oil purchase contracts—especially those made outside of long-term agreements—are concluded one and a half to two months before delivery, allowing adequate time for logistics and planning.
For now, contracts that involve Urals crude set to be shipped in August and September remain valid unless future advisories dictate otherwise. While several shipments have already arrived at Indian ports, others have faced minor delays, further complicating the outlook.
The newly imposed US tariffs have cast a long shadow over India's energy diplomacy, increasing global uncertainty about the stability of crude oil supply chains. The administration in Washington justifies the tariff hike as a punitive measure targeting India's ongoing trade with Russia. Interestingly, the US has not extended similar restrictions to China, another top importer of Russian energy, raising questions about the broader geopolitical calculus.
Amidst this turmoil, oil traders have become increasingly cautious. Brent crude prices have stabilized around USD 67 per barrel after several days of decline, reflecting concerns over potential disruptions in global oil flows and uncertainty surrounding Russia’s ability to secure alternative markets for its exports.
Following the Ukraine conflict, India had dramatically increased its intake of Russian oil, with imports surging to over 2 million barrels per day at their height. However, the volume is likely to decline in the coming months, as Indian refiners hesitate to sign new contracts. Should this trend continue, traders predict Russia may offer deeper discounts on Urals crude or divert more supplies to China, which has so far shown limited interest in this specific oil grade.
Indian oil companies are also broadening their supply base. Efforts are already underway to secure crude from regions such as the Middle East, the United States, and Africa. In recent weeks, state-owned refiners have issued tenders for oil procurement from non-Russian sources, signaling a gradual shift in India’s import strategy. Meanwhile, private refiners like Reliance Industries and Nayara Energy have remained relatively inactive. Nayara, in particular, has faced constraints stemming from European Union sanctions, leading to a slowdown in production.
Experts like R. Ramachandran, former Director of Refineries at Bharat Petroleum, believe that the short-term disruptions can be overcome with strategic realignment. He emphasized that despite initial logistical hurdles, supply-demand dynamics in the crude market will eventually stabilize. According to him, the Middle East emerges as the most viable alternative for India due to its geographical proximity and wide range of crude types. Countries like Saudi Arabia and Iraq are particularly well-positioned to fill the gap left by declining Russian imports.
By late July, Indian refiners had already started reducing purchases of Urals crude due to rising prices, pivoting instead toward spot cargoes from alternative suppliers. This move, though reactive, marks a significant step in India’s evolving energy policy amid global political and economic realignments.
