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State-owned Indian oil refiners, including Indian Oil Corp (IOC) and Bharat Petroleum Corp (BPCL), have secured several Russian crude oil shipments for January 2026 delivery. This move comes amid sharply discounted prices and ample supply from sellers not subject to sanctions.
The purchases were made at a discount of approximately $5 per barrel relative to Brent crude, up from $3 per barrel a month ago. While the total volume remains unclear, sources indicate that Russian oil imports are unlikely to exceed one-third of this year’s average import growth, capping at around 600,000 barrels per day. Notably, Nayara Energy, a Rosneft subsidiary, typically accounts for over half of these purchases.
Factoring in discounts and shipping costs, Russia is expected to earn between $40 and $45 per barrel, with payments primarily in UAE dirhams and US dollars. IOC has quietly resumed Russian oil purchases over recent weeks, receiving some December shipments, while BPCL had previously halted imports.
Indian refiners’ engagement with Russian oil is described as cautious, as Washington tightens sanctions against Rosneft, Lukoil, Surgutneftegaz, and Gazprom Neft. The blacklisting of Russia’s top four oil producers has compelled banks involved in Indian transactions to heighten scrutiny, adding complexity to these deals.
Some refiners, such as Mangalore Refinery and Petrochemicals and HPCL-Mittal Energy, continue to avoid Russian oil. In the private sector, Reliance Industries announced it would stop processing Russian oil at part of its Jamnagar refining complex starting late November.
The latest sanctions have disrupted New Delhi’s strategy of prioritizing the cheapest available oil, which previously allowed Russia to supply up to one-third of India’s total oil imports. In December, most Indian refiners—except two—refrained from ordering Russian oil to mitigate risks associated with US Treasury’s secondary sanctions.
Kremlin spokesperson Dmitry Peskov recently asserted that India’s reduced imports are a temporary situation, emphasizing Russia’s efforts to maintain supply volumes and navigate sanctions. His statement preceded President Vladimir Putin’s visit to New Delhi this weekend.
Amid mounting pressure from Washington on Russia-India trade relations, a former Indian foreign minister suggested this week that India could cut its Russian oil imports by 50%. However, he stressed that both nations would seek to sustain partial oil flows, albeit with reduced dependency.
Analysts predict that tougher US sanctions could displace Russia as India’s top crude oil supplier—a position it has held for two years. Should this occur, Saudi Arabia and other Middle Eastern exporters are poised to reclaim market share.
Nonetheless, the deep discounts in recent transactions indicate that Indian refiners have not entirely exited the Russian oil market. They maintain a flexible strategy: limiting purchases, conducting exploratory buys, and continuously assessing sanction developments to balance economic benefits with geopolitical risks.
Source: Oilprice, ET, Reuters
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