India’s refiners have paused new purchases of Russian crude oil after the United States imposed a fresh round of sanctions on Moscow’s top energy firms, Lukoil and Rosneft. These measures have deepened restrictions already in place from the European Union and the United Kingdom, significantly complicating payment systems and trade routes. The development has left Indian buyers in a state of uncertainty as they await further guidance from the government, banks, and suppliers before resuming long-term contracts.
The tightening of sanctions has triggered immediate disruptions in India’s crude procurement process. Several refiners, both state-run and private, are now scrambling to secure alternative sources of supply. The Indian Oil Corporation (IOC), the country’s largest public-sector refiner, has already floated a new tender to source crude oil from the spot market. Meanwhile, Reliance Industries Limited, India’s biggest private refiner and one of the largest buyers of Russian crude since 2022, has increased its spot purchases to maintain operational stability. Industry insiders told Reuters that multiple shipments, especially those linked to traders with exposure to sanctioned entities, have been cancelled due to fears that payments could get stuck in international banking systems.
One senior procurement official stated that Indian refiners are now taking an extremely cautious approach, ensuring no transactions are routed through companies that may be on Western blacklists. Banks have also grown hesitant to process payments for Russian oil, especially when intermediaries or vessel owners have ties to sanctioned firms. “Several cargoes have already been dropped or rescheduled,” said one official involved in crude purchases. “No one wants to take the risk of payment delays or violations of sanctions.”
Executives across the refining sector confirmed that companies are exploring whether future cargoes can be sourced through non-sanctioned intermediaries or third-party traders. However, most have chosen to halt new deals until greater clarity emerges from both the Indian government and the Russian suppliers. “Until we get a clearer framework on permissible transactions, refiners will stay on the sidelines,” one refinery head noted.
Reliance Industries, which has played a central role in India’s energy trade with Russia since Western restrictions began in 2022, said it remains fully compliant with all global sanction regimes. Reports indicate that Reliance has now stopped importing from Rosneft, its key Russian supplier, though it continues to evaluate other potential trade partners that meet compliance standards.
India’s dependence on discounted Russian oil has grown substantially since the Ukraine conflict began in 2022, helping the country manage import bills and control inflation. According to International Energy Agency (IEA) data quoted by Reuters, India imported approximately 1.9 million barrels of Russian crude per day in the first nine months of 2025. This accounted for about 40% of Russia’s total crude exports—a dramatic shift from pre-war patterns when Russia’s share of India’s imports was below 2%.
However, the trend has started to reverse in recent months. With discounts narrowing and Western sanctions tightening, India’s imports of Russian oil between April and September 2025 fell by about 8.4% year-on-year. Refiners have instead turned to Middle Eastern suppliers like Saudi Arabia and Iraq, as well as to the United States, to fill the shortfall. This diversification, while necessary, has increased import costs slightly due to higher benchmark prices and transportation expenses.
Analysts suggest that the sanctions will likely reshape India’s crude procurement strategy over the coming quarters. If financial channels remain blocked and compliance risks persist, refiners may shift more decisively toward other suppliers. However, industry experts also caution that Russia remains a vital partner for India, and both sides are expected to explore new trade mechanisms—potentially including rupee-based settlements or shipments via third-party traders—to maintain some level of energy cooperation.
In the short term, the uncertainty has created volatility in India’s refining market. Oil companies are prioritizing operational continuity while avoiding any potential violation of international sanctions. The government is reportedly monitoring the situation closely and may issue new trade guidelines soon. Until then, the suspension of fresh Russian oil purchases marks a significant pause in what had become one of the defining energy partnerships of the past three years.
