- India is reducing its reliance on Russian crude and turning to more expensive alternative suppliers.
- US pressure is leaving more Russian oil cargoes unsold and stranded at sea.
Currently, India’s purchases of Russian crude oil are likely to stabilise or decline this month. In turn, this shift is already leaving more unsold cargoes from the OPEC+ producers stranded at sea. As a result, the world’s third-largest oil importer is increasingly turning to costlier supplies from other regions.
Notably, this change follows a clear downturn in imports. Specifically, volumes fell to a three-year low in December. By comparison, that level was almost one-third below the peak seen in June.
According to ship-tracking data and industry sources, demand is weakening. More importantly, political pressure and shifting commercial priorities are driving this trend. For several months, the Trump administration criticised India for buying Russian oil.
In response, Washington argued that these purchases helped finance Russia’s war in Ukraine. Subsequently, the US imposed punitive tariffs of 50%. However, trade talks have not produced an agreement.
Against this backdrop, India’s refining sector is responding to growing risks. Notably, it ranks behind only the US, China and Russia in capacity. Therefore, refiners are reducing their dependence on discounted Russian crude. As a consequence, tankers carrying unsold barrels are idling offshore. In many cases, they have limited alternative destinations.
For now, Russia remains an important supplier. However, Indian refiners are acting with greater caution. Accordingly, buying decisions are becoming more selective and compliance-focused. Ultimately, geopolitical risks are shaping each transaction.
Turning to the data, Vortexa and Kpler show imports of about 1.3 million barrels per day in December. Nevertheless, January volumes remain under strain. As a result, market participants expect the buying level to stabilise. In practical terms, imports may range between 1.2 and 1.4 million barrels per day. Even so, final figures could fall below that range.
At the same time, refiners are adjusting procurement strategies. For example, they are sourcing alternative grades from the Middle East, West Africa and Latin America. However, these barrels come at a higher cost. Meanwhile, purchases from Saudi Arabia have increased this month.
Additionally, Indian Oil Corporation has acquired Ecuadorian crude in a rare deal. Furthermore, it has issued tenders for sour grades similar to Russia’s Urals blend. By contrast, Venezuelan crude remains on hold. Until then, refiners want more explicit.
From the government’s perspective, energy purchases must strike a balance between market realities and affordability. After all, India must supply fuel to 1.4 billion people. Ultimately, with few buyers willing to defy US restrictions, the fate of stranded Russian cargoes remains uncertain. This is despite Urals crude trading at a deep discount to Brent.