The task for the country is to choose between two negatives: a penalty on potentially all of its exports to the US and the costs of cutting Russian oil purchases.
Indian refiners to diversify
While the amount of penalty is unspecified, Indian refiners are likely to diversify their crude sourcing with a gradual shift towards WTI and the Middle East crude, industry players believe.
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The European Union (EU) has recently imposed sanctions on the Indian oil refinery of Russian energy giant Rosneft and lowered the oil price cap, as part of a new raft of measures against Russia over its war in Ukraine.
Russian crude oil
“If Russian crude is priced out due to tariffs/penalties or tighter compliance risks, we anticipate a gradual but steady reallocation toward WTI, Brazilian pre-salt barrels, and a resurgence in Middle Eastern term flows,” Sumit Ritolia, Lead Research Analyst, Refining & Modeling at Kpler had told FE.
He highlighted that if secondary tariffs are imposed and actuality is coming hard on Russian crude, India’s oil import bill could rise significantly, potentially by $3–6 per replacement barrel, depending on origin. “This would impact refiner margins, retail fuel pricing unless mitigated via new term contracts or discounts,” he said.
Russia has become the top supplier of crude oil to Indian refiners post its invasion of Ukraine. The country now accounts for over 35% of India’s total crude oil imports.
India’s imports of Russian crude oil in June alone are estimated to have touched a two-year high of 2.13 million barrels per day, supported by significant pricing advantages, according to data from global real-time data and analytics provider Kpler.
Even with longer haul and shadow fleet reliance, Russian barrels remain $3–8/bbl cheaper than Middle Eastern or US grades on a landed-cost basis. If tariffs are levied on Russian oil, India is highly likely to experience a rise in its overall oil import costs.
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As per latest data from Petroleum Planning and Analysis Cell, the country’s import bill during Apr-Jun FY26 declined by almost 19% on-year to $30.6 billion owing to discounts on Russian oil.
However, India’s oil minister Hardeep Sing Puri had earlier said that India is not worried of the secondary sanctions from the US over Russian crude oil imports and will continue sourcing oil from wherever necessary to ensure energy security.
The country feels “no pressure” and has enough supply options to ensure uninterrupted fuel availability even in turbulent times, Puri had said.
With Venezuelan crude already under US tariffs and now an additional penalty for buying Russian oil, Indian refiners are likely to diversify oil supplies further primarily from the US, Brazil, West Africa, and the Middle East.
India’s crude oil inflows from the US surged more than 50% in the first half of 2025, compared with the same period of 2024, while flows from Brazil rose 80% over the same period, as per data from the S&P Global commodity Insights.
According to data from S&P Global Commodities at Sea, India imported 271,000 barrels per day of crude oil from the US in the year’s first half, up around 51% from 180,000 b/d imported in the same period in 2024.
Indian refiners have been used to relatively large volumes of US crude in the past, but volumes had slowed down over the past two to three years when India turned to Russian crude after it started providing heavy discounts on its crude.
India has also been gradually increasing its intake of Brazilian grades like Tupi and Búzios which are cost-competitive and suit Indian refining slates.
Crude inflows from Brazil posted the sharpest growth in the six-month period, rising about 80% year over year to 73,000 b/d from nearly 41,000 b/d, the S&P data showed.
However, analysts note that Indian refiners are likely to continue sourcing Russian crude opportunistically, especially if the price spreads remain wide and existing financial and shipping workarounds remain viable.