Why Indian Refiners Are Doubling Russian Crude Oil Imports in 2025 Despite U.S. Pressure

India’s Expanding Energy Strategy: How Discounts Are Driving a Surge in Russian Crude Oil Imports

India’s energy market in 2025 is witnessing a renewed surge in crude oil imports from Russia, despite increasing pressure from the United States and other Western allies. The driving force behind this trend is simple yet powerful — deepening discounts on Russian crude oil. These price advantages have prompted Indian refiners to step up purchases, balancing economic priorities with geopolitical challenges.

With domestic consumption on a constant rise and global oil prices fluctuating, India’s decision to keep importing Russian crude is both an economic necessity and a strategic maneuver.


Background: India’s Oil Dependency and the Role of Russia

India is the world’s third-largest consumer of crude oil, importing nearly 87% of its total oil requirements. With the Indian economy projected to grow above 6.5% in FY 2025–26, domestic demand for fuel is expected to cross 5.5 million barrels per day (bpd).

Historically, India relied on countries like Iraq, Saudi Arabia, and the UAE for the bulk of its oil needs. However, after the geopolitical tensions in 2022, Russia emerged as a new dominant supplier by offering heavy discounts on its crude oil — primarily the Urals blend — which matched Indian refineries’ processing capabilities.

By mid-2024, Russia had become India’s single largest oil supplier, providing over 34% of India’s total crude imports, surpassing even Iraq and Saudi Arabia.


Key Numbers Behind India’s Russian Oil Surge

FactorData (as of Q4 2025)Observation
Russian crude discount (vs. Brent)$2.00–$2.50 per barrelDoubled from $1 per barrel earlier in 2025
India’s total crude imports~5.3 million bpdProjected to rise to 5.6 million bpd by mid-2026
Share of Russian crude in India’s imports~34–36%Russia remains top supplier for 18 months straight
Average landed cost of Russian oil$72–$74 per barrelCheaper than Brent average of $84–$87 per barrel
Savings for Indian refiners (annualized)Approx. $3.8–$4.5 billionDue to discounted Russian barrels
Nayara Energy & IOC imports combinedOver 1 million bpdMajor buyers leveraging discounted deals
Expected import increase (Nov 2025–Jan 2026)10–15%Traders anticipate higher volumes due to favorable pricing

Why Are Discounts Rising Now?

The discounts on Russian crude have nearly doubled in recent months due to a combination of geopolitical and logistical factors:

  1. Ukraine conflict disruptions: Attacks on Russian refineries have limited domestic processing, freeing up more crude for export.
  2. Sanctions pressure: Western restrictions have pushed Russia to offer deeper discounts to maintain export volumes.
  3. Freight and insurance costs: Russia often absorbs part of these costs to remain competitive in Asian markets.
  4. Limited Western buyers: Europe has sharply reduced imports from Russia, leaving Asia — primarily India and China — as Russia’s lifeline buyers.

U.S. Pressure vs. India’s Energy Sovereignty

Despite repeated diplomatic warnings and increased U.S. tariffs on select Indian exports, New Delhi continues to assert its strategic autonomy. Indian officials have emphasized that the country’s energy policy is “dictated by national interest, not external influence.”

  • The U.S. has expressed concern over India’s increasing imports from Russia, claiming it indirectly funds Moscow’s war operations.
  • In response, India maintains that purchases are made through legitimate market channels and comply with all international norms.
  • India’s foreign policy approach — described as “multi-alignment” — allows it to balance ties with Washington, Moscow, and Gulf partners simultaneously.

Benefits for India’s Economy and Refining Sector

India’s growing import of discounted Russian oil has had tangible economic and industrial benefits:

  1. Reduced import bill: With savings exceeding $4 billion annually, India’s trade deficit and current account pressure have eased.
  2. Stable fuel prices: Domestic fuel prices have remained relatively insulated from global spikes, protecting consumers from inflation.
  3. Higher refinery margins: Indian refiners are achieving stronger refining margins (Gross Refining Margin or GRM), often above $9–$10 per barrel, compared to $6 in 2021.
  4. Export competitiveness: Cheaper input costs have boosted exports of refined petroleum products like diesel and jet fuel.
  5. Diversified sourcing: Russia has replaced part of India’s Middle East dependency, improving energy security.

Major Players in the Import Expansion

Refinery / CompanyRussian Oil ShareKey Notes
Indian Oil Corporation (IOC)~30% of total importsGovernment-backed; maintains regular term contracts
Bharat Petroleum (BPCL)~18%Increasing spot cargo purchases
Hindustan Petroleum (HPCL)~12%Using third-party intermediaries to manage insurance issues
Nayara Energy (linked to Rosneft)~40% of intakeFaces payment and banking challenges due to sanctions
Reliance Industries (RIL)10–15%Diversified blend of Russian and Middle-Eastern crudes

These refiners have gradually adjusted technical configurations to handle high-sulphur Urals crude efficiently, making them more flexible and cost-competitive.


Risks and Challenges Ahead

While Russian crude offers clear economic advantages, the policy carries notable risks:

  1. Sanction volatility: If global sanctions tighten, payment mechanisms and vessel insurance could face fresh hurdles.
  2. Logistics and shipping risk: Longer voyage distances (via Suez Canal or Cape routes) add to delivery time and exposure to disruptions.
  3. Discount erosion: As global demand normalizes or if Russia limits supply, discounts could narrow, reducing the financial incentive.
  4. Diplomatic friction: Prolonged defiance of U.S. pressure may impact broader trade or technology partnerships.
  5. Market saturation: Over-reliance on Russian oil could expose India if geopolitical dynamics shift abruptly.

Expert Outlook: 2025–2027 Scenario

Energy analysts predict that India’s Russian oil imports will continue strong through 2026, with gradual moderation thereafter.

ScenarioExpected TrendLikely Outcome
Best CaseStable discounts ($2–$3/barrel), no new sanctionsImports rise 10–15% YoY
Base CaseMild diplomatic pressure, steady pricesImports stabilize at 33–35% share
Worst CaseTightened U.S. sanctions, disrupted shippingImports fall below 25% by 2027

In all cases, India is expected to keep diversifying its energy sources, with focus on renewables, Middle Eastern LNG, and African crude partnerships in the longer run.


Final Thoughts

India’s choice to double down on discounted Russian crude highlights a pragmatic economic strategy rather than a political alignment. As the world navigates shifting energy equations, India’s energy independence policy — anchored in affordability, stability, and diversification — continues to define its path.

While Washington may view this as defiance, for New Delhi it is simply economic realism in an uncertain global market. With refinery upgrades, rising consumption, and discounted crude, India is positioning itself as both a smart buyer and a resilient energy powerhouse in the evolving global oil landscape.


Disclaimer:

This article is based on compiled market data, government statements, and independent analysis of publicly available information. It does not promote or criticize any nation’s policy. All figures are approximate estimates meant for informational and educational purposes only.