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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
Factor | Data (as of Q4 2025) | Observation |
---|---|---|
Russian crude discount (vs. Brent) | $2.00–$2.50 per barrel | Doubled from $1 per barrel earlier in 2025 |
India’s total crude imports | ~5.3 million bpd | Projected 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 barrel | Cheaper than Brent average of $84–$87 per barrel |
Savings for Indian refiners (annualized) | Approx. $3.8–$4.5 billion | Due to discounted Russian barrels |
Nayara Energy & IOC imports combined | Over 1 million bpd | Major 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:
- Ukraine conflict disruptions: Attacks on Russian refineries have limited domestic processing, freeing up more crude for export.
- Sanctions pressure: Western restrictions have pushed Russia to offer deeper discounts to maintain export volumes.
- Freight and insurance costs: Russia often absorbs part of these costs to remain competitive in Asian markets.
- 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:
- Reduced import bill: With savings exceeding $4 billion annually, India’s trade deficit and current account pressure have eased.
- Stable fuel prices: Domestic fuel prices have remained relatively insulated from global spikes, protecting consumers from inflation.
- 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.
- Export competitiveness: Cheaper input costs have boosted exports of refined petroleum products like diesel and jet fuel.
- Diversified sourcing: Russia has replaced part of India’s Middle East dependency, improving energy security.
Major Players in the Import Expansion
Refinery / Company | Russian Oil Share | Key Notes |
---|---|---|
Indian Oil Corporation (IOC) | ~30% of total imports | Government-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 intake | Faces 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:
- Sanction volatility: If global sanctions tighten, payment mechanisms and vessel insurance could face fresh hurdles.
- Logistics and shipping risk: Longer voyage distances (via Suez Canal or Cape routes) add to delivery time and exposure to disruptions.
- Discount erosion: As global demand normalizes or if Russia limits supply, discounts could narrow, reducing the financial incentive.
- Diplomatic friction: Prolonged defiance of U.S. pressure may impact broader trade or technology partnerships.
- 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.
Scenario | Expected Trend | Likely Outcome |
---|---|---|
Best Case | Stable discounts ($2–$3/barrel), no new sanctions | Imports rise 10–15% YoY |
Base Case | Mild diplomatic pressure, steady prices | Imports stabilize at 33–35% share |
Worst Case | Tightened U.S. sanctions, disrupted shipping | Imports 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.