Indian refiners rejigging Russian oil contracts to thwart Trump sanctions?

Indian refiners are recalibrating their sourcing strategies and cutting back sharply on Russian crude imports to comply with new US sanctions, a move that could reshape energy trade flows between Moscow and New Delhi, reports suggest.

The shift follows Washington’s latest restrictions, targeting Russia’s two largest oil producers, Rosneft and Lukoil, with the US Treasury directing companies to wind down transactions involving the firms by 21 November.

According to a Reuters report, industry officials claim refiners are preparing for “massive cuts” in Russian oil purchases — though some shipments already in play may still arrive before the deadline. “We don’t anticipate it will go to zero immediately as there will be some barrels coming into the market,” one refinery source said.

Reliance Industries, India’s biggest private importer of Russian crude, is reportedly planning to scale back or temporarily halt its purchases. The company operates the world’s largest refining complex, sited in Gujarat, and has a long-term contract to source around 500,000 barrels per day from Rosneft, alongside spot purchases through intermediaries.

“Recalibration of Russian oil imports is ongoing, and Reliance will be fully aligned with Government of India guidelines,” a company spokesperson said in response to queries published by Business Today.

State-run refiners also — including Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL), Hindustan Petroleum Corporation (HPCL), and Mangalore Refinery and Petrochemicals (MRPL) — are scrutinising bills of lading for Russian shipments scheduled after the November deadline, to confirm that no cargoes originate directly from Rosneft or Lukoil. Trade sources noted that state companies seldom buy directly from these Russian firms, preferring intermediaries for most transactions.

Nayara Energy, in which Rosneft holds a major stake, continues to source crude from the Russian oil major but has not commented on its future procurement plans.

Indian refiners have also begun reviewing trade documentation to ensure full compliance with evolving sanctions rules. The tightening of US measures comes as the Indian oil ministry has yet to issue an official statement on how refiners should proceed.

Russia currently accounts for about 34 per cent of India’s total crude imports, while roughly 10 per cent of the nation’s oil and gas requirements (by value) come from the United States. Bilateral trade between India and the US reached USD 71.41 billion in the first half of FY26, up nearly 12 per cent year-on-year, according to commerce ministry data.

Despite plans for curtailment, Indian imports of Russian crude rebounded in early October after a three-month decline. Ship-tracking data from global analytics firm Kpler showed imports tracking at around 1.8 million barrels per day (bpd), up by roughly 250,000 bpd from September. The increase was attributed to renewed discounts and higher refinery runs during the festive season.

This data, however, predates US president Donald Trump’s 15 October claim that Prime Minister Narendra Modi had agreed to stop Russian oil imports — a statement the ministry of external affairs dismissed, saying it was unaware of any such conversation.

Sumit Ritolia, lead research analyst (refining and modelling) at Kpler, suggested the claim was likely a negotiation tactic rather than an imminent policy move. “Russian barrels remain deeply embedded in India’s energy system for economic, contractual, and strategic reasons,” he said.

India began buying discounted Russian crude in 2022, after Western nations imposed sanctions on Moscow over its invasion of Ukraine.

Russia’s share in India’s oil imports surged from just 1.7 per cent in FY20 to around 40 per cent in FY24, making it India’s largest supplier. Iraq and Saudi Arabia remain the second and third biggest suppliers, followed by the US and the UAE.

Ritolia noted that the July–September dip in imports was primarily driven by seasonal refinery maintenance, not sanctions-related caution.

Even with narrower discounts than a year ago, Russian crude continues to offer Indian refiners superior margins, with discounts averaging USD 3.5–5 per barrel compared to USD 1.5–2 earlier this year.

“Replacing Russian crude entirely would be difficult, costly, and risky,” Ritolia said, pointing out that while Indian refineries can technically process a wide range of grades, switching suppliers would raise freight costs and reduce margins. “Unless there is a government directive, refiners are unlikely to forgo cheaper barrels voluntarily, much like the earlier case with Iranian oil.”

India has maintained that its oil purchases are guided by national energy security and economic considerations. Analysts believe any significant reduction in Russian imports would only occur if formal sanctions were extended to India’s transactions, like those previously imposed on Iran or Venezuela.

“If Washington intensifies pressure, Indian refiners might make symbolic cuts — about 100,000 to 200,000 bpd — to signal diversification, but not a structural shift,” Ritolia said.

While increasing imports from the US could serve as a political gesture, the scope remains limited by logistical and refining constraints. Kpler data shows Indian imports of US crude averaging around 310,000 bpd in 2025, up from 199,000 bpd last year, with volumes expected to peak near 500,000 bpd in October.

The Trump administration has intensified criticism of India’s Russian oil purchases. US Treasury secretary Scott Bessent claimed in August that “some of the richest families in India” benefited from discounted Russian crude, asserting that India had earned USD 16 billion in “excess profits”.

Bessent also signalled plans to impose additional tariffs on Indian exports, calling the country’s oil buying practices “profiteering”. President Trump later threatened to raise levies on Indian goods to as high as 50 per cent, citing Russian oil imports as one of the main reasons.

Before Russia’s invasion of Ukraine, less than 1 per cent of India’s crude came from Moscow. The share has since jumped to over 40 per cent, a development US officials had earlier tolerated under the G7’s price-cap mechanism.

For now, Indian refiners appear focused on compliance rather than complete disengagement, however. As one industry executive put it, “Diversification is ongoing — not as a replacement strategy, but as a hedge for continuity, flexibility, and national interest.”

With agency inputs