MC EXCLUSIVE No government directive on Russian oil; refiners weigh costs, alternatives independently, sources say

Russia currently contributes around 34 percent of India’s total oil requirements compared to just 0.2 percent before the Ukraine war started in 2022.

The Indian government has not instructed refiners to reduce purchases of Russian crude, leaving any cuts at the companies’ discretion, based on pricing and other parameters, multiple people familiar with the development said.

“It is typically a decision for the refiners themselves," a government official said, referring to any potential scaling back of Russian crude oil purchases.

An industry executive with direct knowledge of the matter said that the government has not asked refiners to scale back on Russian oil. “If refiners are doing so, it is on their own.”

India is facing a 50 percent tariff on most exports to the US, which includes an additional 25 percent owing to Russian oil purchases. New Delhi is also negotiating a trade deal with Washington, the deadline for which is the Fall of this year.

President Donald Trump this month said that India would reduce or halt Russian crude imports, linking it to ongoing trade negotiations. Russia currently contributes around 34 percent of India’s total oil requirements compared to just 0.2 percent before the Ukraine war started in 2022.

India’s crude imports from Russia in October till the 16th were around 1800 thousand barrels per day (kbd), up 250 kbd month-on-month, according to data from Kpler.

Commerce Secretary Rajesh Agarwal earlier this month said that India has room to add an additional $14-15 billion worth of energy purchases from the US annually, which would be in line with the country’s strategy to diversify such imports.

Just last month, Commerce Minister Piyush Goyal indicated that India may buy more oil from the US following repeated calls from Trump for New Delhi to cut its purchases of Russian crude.

More oil and gas imports from the US are seen as a measure to lower the trade deficit between India and America, which stood at around $41 billion in FY25.

India’s exports to the US in FY25 increased nearly 12 percent to $86.51 billion.

Minimal impact

For state-run oil marketing companies (OMCs), the impact of the latest round of sanctions is expected to be marginal since they do not have direct long-term contracts with Russian companies that have been slapped with fresh curbs.

“Purchases of crude oil from Russia are made through spot tenders where global traders participate after procuring crude from Russian entities. So, for state-run OMCs, the impact will be minimal," said an official from a state-run refiner on the condition of anonymity.

India's oil and commerce ministries, as well as the state refiners, did not respond to requests for comment at the time of publication of this report.

On Wednesday, the US Treasury blocked global transactions involving Russia’s two biggest oil companies — Rosneft and Lukoil, accusing them of fuelling Moscow’s war against Ukraine. The European Union reportedly followed with its own energy sanctions on Thursday, including a plan to ban imports of Russian liquefied natural gas by 2027.

According to the Global Trade Research Initiative, these two energy giants together account for about 57 percent of Russia’s oil output and export earnings. The remaining 43 percent, produced by other firms, technically remains unsanctioned and “in theory, global buyers could keep purchasing from these non-sanctioned entities without violating US restrictions.”

The official cited above also confirmed that there has been no direction from the government to scale down Russian oil imports as such.

"The point which needs people's understanding is that the government does not need to tell OMCs whether to scale up or down. Each OMC is first a commercial company, and cost is an important deciding factor. India's exposure to Russian crude oil has, anyway, been declining for the past few months because the discounts are drying up,” this official said.

A second official from a leading state-run OMC added that teams within their company have been working to diversify their sources of crude oil imports.

"It was from 2022, from the start of the Russia-Ukraine war, that India's crude oil imports from Russia increased. But now if by chance the costs are higher, we are very well equipped to diversify by sourcing more from the Middle East, Africa and other regions as well. But currently, we are in a wait-and-watch mode while our teams work on alternative plans just in case it is needed," this official said.