Signage at a Lukoil gas station in Moscow region, Russia, October 28, 2025. India’s largest private oil refiner Reliance said Oct 23 it would halt its purchases of Russian crude – 40 per cent of which comes from Rosneft and Lukoil. - Reuters
BENGALURU: India, one of Moscow’s largest oil purchasers, is starting to suspend some of its oil imports from Russia to mollify US President Donald Trump, while it works on renegotiating a trade deal with the US.
After the Trump administration imposed new sanctions on two of Moscow’s biggest oil producers, Rosneft and Lukoil, last week, India’s largest private oil refiner Reliance said Oct 23 it would halt its purchases of Russian crude – 40 per cent of which comes from Rosneft and Lukoil.
Indian state-owned oil refinery IndianOil also announced its commitment on Oct 28 to adhere to international sanctions, though it stopped short of saying it would no longer buy discounted Russian oil.
Any trim though is unlikely to be substantial for now, suggesting New Delhi may be taking an incremental approach while demonstrating good faith in trade talks. Kpler, a data analytics firm that tracks oil tankers, found no visible sign of a slowdown in the flow of oil from Russia, with October imports tracking around 1.8 million barrels per day.
Meanwhile, its crude oil imports from the US reached 540,000 barrels per day, the highest since 2022.
New Delhi is “playing a wait and watch game,” hoping the cut backs on Russian oil for now will sweeten its trade deal with the US, Vandana Hari, who founded the energy consultancy Vanda Insights, told The Straits Times.
India, which derives a third of its oil usage from Russia, faces a delicate balancing act of keeping its energy supply and bills stable, while also placating the US in its effort to dent Moscow’s ability to fund its war against Ukraine.
New Delhi has not officially commented on any purchase adjustments.
The US imposed 50 per cent tariffs on goods imported from India from August, half of which are penal tariffs for purchasing Russian crude.
“India turned to Russian oil only three years ago, because of discounted prices,” said Hari. “So, Indian refineries can easily pivot to Middle Eastern suppliers, get more from West Africa, Guyana and Brazil, and maybe even the US, which will make Trump happy.”
Before 2022, India’s Russian crude imports used to account for less than three per cent of its total crude imports, but today account for 34 per cent.
Given the uncertainty introduced by America’s sanctions, which require American and non-American refineries to stop buying Russian oil by Nov 21 or face restrictions on financing and licences, countries like India are beginning to explore other sources.
Hari said that India would not struggle to diversify its crude sources. The only question is the cost at which Russian and other alternative sources of crude would be purchased.
India has been buying discounted crude oil from Russia, but US sanctions have already eroded the advantage, and raised global crude prices, said analysts.
“The arbitrage that Russian oil offered during the energy crisis has tapered off, and there is no need for India now to have significant purchases of Russian oil,” Natixis’ Senior Economist Trinh Nguyen told CNBC on Oct 24.
Shipping and trade data show that between April and September, India’s Russian oil procurements declined by 8.4 per cent year-on-year, owing to reduced discounts and limited supplies. Refiners gradually increased their imports from the Middle East and the US.
However, the prices of alternative sources of crudes have also risen, with the broader supply crimped by the latest American sanctions on Russian oil supplies.
Whatever the case, India’s import bill is set to increase, with potentially worrying consequences.
“If margins compress or retail prices (of fuel) rise, the result could be inflation, political backlash, and weaker refinery profitability. Higher-cost crude could also worsen domestic operating budgets and put pressure on refiner credit lines,” Kpler said in a Oct 21 report.
But most energy experts say that few countries – especially the chief buyers Turkiye, China and India – would dramatically slash their Russian oil purchases. The political situation is still fluid, with ongoing political and diplomatic negotiations in many fronts.
“Aside from the rise in global crude oil prices, which has stabilised now, the reaction from the oil markets and oil purchasing countries is subdued as it waits and watches how seriously the US will implement the sanctions, and if Trump will allow himself to respond to any Russian overtures to reduce sanctions,” said Hari.
The sanctions triggered a more than 7 per cent rise in the global oil price last week to about US$65 per barrel, but oil prices are now holding at around US$60 due to a huge amount of surplus capacity, the International Energy Agency Executive Director Fatih Birol told reporters on the sidelines of the Singapore International Energy Week on Oct 28.
Kirill Dmitriev, Russian President Vladimir Putin’s special envoy for investment and economic cooperation, landed in the US for “official talks” days after Trump announced the sanctions.
“I believe Russia and the US and Ukraine are actually quite close to a diplomatic solution," Dmitriev said on Oct 23.
An Indian delegation is in the US to renegotiate a trade deal.
Five rounds of negotiations have been completed, and officials told reporters that the agreement is now close to being finalised.
India is hedging its bets in a volatile global situation by diversifying its energy supply.
“There will be short-term frictions, but no lasting disruptions,” Hari said. “The crude may have to travel longer distances, take more time and need more intermediaries, but the oil will continue to flow.” - The Straits Times/ANN
