Amid sanctions, India braces to sharply cut Russian oil imports

By Al Mayadeen English
Source: Reuters
23 Oct 2025 22:54

India is preparing to cut Russian oil imports following US sanctions on Rosneft and Lukoil, a move that could support trade negotiations and reduce export tariffs.

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An oil refinery in Guwahati, India, on March 30, 2023 (AFP)

Indian refiners are preparing to significantly reduce imports of Russian oil in response to fresh US sanctions targeting two of Russia’s largest oil producers, Rosneft and Lukoil, industry sources confirmed to Reuters on Thursday. The move could ease pressure on ongoing trade negotiations with Washington, which has tied punitive tariffs on Indian exports to energy trade with Moscow.

India has become the leading buyer of discounted Russian seaborne crude following Moscow’s 2022 operation in Ukraine, averaging around 1.7 million barrels per day in the first nine months of 2025. But the latest sanctions, introduced under US President Donald Trump’s second term, are prompting a realignment.

Privately-owned Reliance Industries, India’s top importer of Russian oil, is reportedly reducing or halting Russian crude purchases altogether, including supplies under a major long-term agreement with Rosneft.

“Recalibration of Russian oil imports is ongoing and Reliance will be fully aligned to Government of India guidelines,” a company spokesperson stated to Reuters.

State refiners, Indian Oil Corporation, Bharat Petroleum Corporation, and Hindustan Petroleum Corporation, are also auditing trade documentation to ensure compliance, particularly regarding any crude sourced directly from Rosneft or Lukoil. Sources say while volumes won’t immediately drop to zero, supply from intermediaries may continue in the short term.

Rosneft and Lukoil are believed to supply roughly 60% of Russian oil purchased by India, ICRA Vice President Prashant Vashisth told Reuters. Substituting those volumes with Middle Eastern or Latin American crude is feasible but would marginally increase India’s overall oil import bill by under 2% annually.

Impact on trade talks, financial channels

The sanctions, announced Wednesday, reflect Trump's growing frustration with Russian President Vladimir Putin. The US Treasury has given companies until November 21 to end transactions with Rosneft and Lukoil.

According to analysts, Indian refiners looking to maintain access to US financial markets are expected to swiftly cut Russian oil intake. “It all depends on banks,” said one refinery official. “If banks clear payments, we will buy. Otherwise, my intake will be zero.”

Reliance, owned by billionaire Mukesh Ambani, operates the world’s largest refining complex in Jamnagar, Gujarat, and has a standing agreement to import up to 500,000 barrels per day from Rosneft. However, it has recently turned to spot purchases from the Middle East and Brazil to offset expected supply disruptions.

Sources noted to Reuters that even before the new US sanctions, Reliance had considered ending Russian oil imports for one of its export-focused refineries to comply with a forthcoming European Union ban on refined products made from Russian crude.

Nayara Energy, partly owned by Rosneft, also sources crude from the Russian state giant but has not commented on its future procurement plans.

State refiners typically avoid direct deals with Rosneft or Lukoil, relying on intermediaries instead.

Brent crude futures jumped by nearly 5% by Thursday afternoon in response to the geopolitical developments.

Strategic, economic calculations

While India has the capacity to diversify its oil supply sources, the shift away from Russian oil is expected to carry both economic and diplomatic implications. Reducing dependence on Russian crude may strengthen India's position in trade talks with the US, potentially leading to a reduction in tariffs on Indian exports.

Nonetheless, the recalibration underscores the complex balancing act between securing affordable energy, managing international partnerships, and navigating evolving geopolitical tensions.