India’s refiners are sharply increasing purchases of Russian crude oil as premiums have nearly halved to $5-6 per barrel from a high of $10-12 immediately after the start of the West Asia war.
This provides critical cost relief to them at a time when West Asia crude premiums, freight charges and war-risk insurance costs, have surged due to disruptions around the Strait of Hormuz, a senior oil industry official, who did not wish to be identified, said.
The development comes even as India’s Russian crude imports continue to remain near record highs of around 1.9 million barrels per day (mbpd) in May, according to Kpler data.
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“Russian oil premiums have softened amid weaker Chinese crude buying and increased availability of Russian barrels following refinery disruptions caused by Ukrainian drone strikes, which is currently weighing on premiums,” said Nikhil Dubey, Senior Research Analyst, Refining & Modeling at Kpler.
Saudi official selling price (OSP) premiums have surged to nearly $18 per barrel, far above current Russian delivered premiums of $5-6 per barrel, sharply widening the cost gap between West Asian and Russian crude for Indian refiners.
Cost Chasm
At the same time, freight rates from the Persian Gulf to India have jumped to nearly $10 from earlier levels of around $2-3, while war-risk insurance costs have also risen sharply amid vessel shortages and continuing disruptions around the Strait of Hormuz.
Analysts said the moderation in Russian crude premiums comes at a crucial time for Indian refiners as procurement costs from West Asia continue to rise sharply.
Before the latest geopolitical escalation, Russian crude had largely traded at discounts to dated Brent after Western sanctions, following the Ukraine war forced Moscow to reroute supplies towards Asia. However, tightening shipping availability and sanctions-linked disruptions had temporarily pushed Russian cargoes into premium territory earlier this year.
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“The sharp fall in Russian crude premiums to $5-6 per barrel provides meaningful cost relief for Indian refiners at a time when freight, insurance and West Asian crude premiums have surged sharply due to the Iran conflict,” said Prashant Vasisht, senior vice president and co-group head, Corporate Ratings, Icra. “Lower Russian differentials help partially offset elevated landed crude costs and support refining margins and fuel supply stability. Over the longer term, however, India’s dependence on opportunistic discounted crude underscores the need for greater supply diversification and strategic energy resilience,” he added.
The United States has also extended a temporary waiver allowing Russian oil already loaded on vessels to continue reaching buyers despite sanctions restrictions, extending the transaction deadline till June 17. The waiver, first issued in March and extended subsequently, had allowed countries, including India, to continue purchasing oil linked to sanctioned Russian entities after the US-Israeli conflict with Iran disrupted global energy flows and triggered one of the biggest supply shocks in recent years.
Corporate Stockpiling
Indian refiners have simultaneously increased dependence on Russian crude amid disruptions in annual term supplies from West Asia. State-run Bharat Petroleum Corporation (BPCL) has increased the share of Russian crude in its total imports to around 40-41% in recent weeks from 31% during Q4FY26, BPCL Director (Finance) VRK Gupta said.
Import data showed Indian refiners sharply ramped up Russian crude intake between January and May. Indian Oil Corporation (IOC), the country’s largest refiner, increased Russian crude imports by nearly 58% to 831 thousand barrels per day (tbpd) in May from 526 tbpd in January. BPCL increased imports by around 35% to 208 tbpd from 154 tbpd during the same period.
HPCL, which had negligible Russian crude intake earlier this year, imported around 165 tbpd in May, while MRPL’s Russian crude imports rose from virtually zero in January to 145 tbpd in May. HMEL increased intake more than three-fold from 35 tbpd in March to 121 tbpd in May. Reliance Industries imported around 196 tbpd of Russian crude in May, while Nayara Energy imported 111 tbpd during the month, reflecting continued dependence of Indian refiners on Russian barrels amid elevated Middle East crude premiums and continuing geopolitical volatility.
Even after sanctions on Russian entities, vessels and financial channels, Russian oil itself remained outside direct sanctions, allowing Indian refiners to continue procurement through compliant shipping, insurance and payment arrangements.
TOPICSCrude oilThis article was first uploaded on May twenty-one, twenty twenty-six, at thirty-five minutes past twelve in the am.