India to scale back Russian oil purchases after tariff relief deal with US

New Delhi: India is expected to gradually reduce its crude oil imports from Russia following an understanding reached with the United States in return for lower trade tariffs, sources said. However, the imports are likely to continue in the near term, as refiners such as Nayara Energy have limited sourcing options.

On February 6, US President Donald Trump signed an executive order withdrawing a 25 per cent duty on Indian imports, citing New Delhi’s commitment to curb purchases of Russian crude.

Although Indian refiners have not received any official instruction to stop buying Russian oil, they have been informally advised to begin scaling down purchases, according to three sources familiar with the matter.

Most refiners are expected to fulfil existing contracts placed six to eight weeks in advance but refrain from making fresh orders once these are completed, sources said.

According to a PTI report, Hindustan Petroleum Corporation Ltd (HPCL), Mangalore Refinery and Petrochemicals Ltd (MRPL), and HPCL-Mittal Energy Ltd (HMEL) had halted Russian oil purchases soon after US sanctions were imposed on major exporters last year. Other refiners, including Indian Oil Corporation (IOC) and Bharat Petroleum Corporation Ltd (BPCL), are expected to gradually wind down their imports.

Reliance Industries Ltd, the country’s largest buyer, which suspended purchases late last year following sanctions on Rosneft and Lukoil, is also likely to stop buying Russian crude again after the delivery of its resumed cargo of 1,50,000 barrels in the coming weeks.

Nayara Energy is likely to be the main exception. The company was sanctioned first by the European Union and later by the UK due to its Russian links, as Rosneft holds a 49.13 per cent stake. Because of these restrictions, most major suppliers avoid doing business with Nayara, forcing it to rely on Russian oil sourced through non-sanctioned entities.

The Oil Ministry declined to comment on the issue, while the Commerce Ministry and the Ministry of External Affairs have not addressed India’s commitments regarding Russian oil imports.

Sources said India’s purchases from Russia have been falling since US sanctions on Rosneft and Lukoil took effect.

Imports averaged about 1.2 million barrels per day in December 2025, down from a peak of around 2.1 million barrels per day in May 2023. They declined further to about 1.1 million barrels in January and are expected to fall below 1 million barrels per day in the coming months. Under the new understanding with Washington, imports could soon be reduced by nearly half.

India depends on imports for nearly 90 per cent of its crude oil requirements. Discounted Russian oil, offered at lower prices following Western sanctions over Moscow’s invasion of Ukraine in February 2022, has helped the country contain its import bill.

Nayara is expected to continue buying Russian crude from non-sanctioned suppliers in the short term, sources said.

Officials explained Nayara’s situation to US trade representatives during talks in December, and the company may require an exemption or special dispensation from any policy restricting Russian oil purchases.

According to Sumit Ritolia, Lead Research Analyst for Refining and Modeling at Kpler, the India-US trade agreement is unlikely to immediately affect Russian oil imports.

"Russian volumes remain largely locked in for the next 8-10 weeks and continue to be economically critical for India's complex refining system, supported by deep discounts on Urals relative to Brent. Imports are expected to stay broadly stable in the 1.1-1.3 million barrels a day range through Q1 and early Q2," he said.

"Despite a recent moderation in purchases, India is unlikely to fully disengage in the near term."

Prashant Vasisht of Icra said the trade pact also involves India increasing purchases of US crude and potentially sourcing oil from Venezuela.

"For the Indian refining sector, there are ample avenues, including the US, to purchase crude as Russian crude accounted for less than 2 per cent of Indian crude imports prior to FY2023."

He added that Russian crude discounts were limited before sanctions announced in October 2025, and replacing such supplies with market-priced oil would raise India’s import bill by less than 2 per cent.

Vasisht also noted that Venezuelan crude, which is heavy and sour and therefore cheaper, could attract Indian refiners, many of which are equipped to process such grades.