India’s Russian Oil Imports Drop One-Third After US Sanctions

New Delhi: India’s imports of Russian oil fell by nearly a third after stringent US sanctions on key Kremlin-linked exporters came into effect on November 21, and analysts expect further declines in December as refiners turned to alternatives to avoid breaching sanctions.

According to real-time data analytics company Kpler, India's crude oil imports from Russia averaged 1.8 million barrels per day (bpd) in November and accounted for more than 35 per cent of its total crude import mix. The November imports, which compare with 1.5-1.6 million bpd of Russian oil flow in October, are expected to be a 5-month high, driven by increased imports before the November 21 deadline.

“Before November 21, imports were closer to 1.9-2.0 million bpd as buyers moved cargoes ahead of the deadline, after which volumes have slowed. It looks like refiners stocked up on crude ahead of the sanctions, planning to process it once the rules were in force,” said Sumit Ritolia, lead research analyst, refining & modelling of Kpler.

Post that, flows were tracking around 1.27 million bpd, down 570,000 bpd month-on-month. “Based on current loadings and voyage activity, we expect December arrivals to be in the range of 1.0 million bpd,” he said, adding, “This aligns with our earlier view that, in the short term, Russian flows could ease toward around 800,000 bpd before stabilising.”

India is the world’s third-largest oil importer and emerged as the biggest buyer of discounted Russian crude after Western countries shunned Moscow following its February 2022 invasion of Ukraine. India dramatically increased Russian imports as sanctions and reduced European demand made the barrels available at steep discounts, pushing its share from under 1 per cent to nearly 40 per cent of total crude imports. In November, Russia remained the country's top supplier, accounting for more than a third of all crude oil imported.

The sanctions have resulted in companies like Reliance Industries, Hindustan Petroleum Corporation Ltd (HPCL), HPCL-Mittal Energy Ltd and Mangalore Refinery and Petrochemicals Ltd halting imports for now. The only exception is Rosneft-backed Nayara Energy, which is majorly dependent on Russian crude after supplies from the rest of the world were effectively cut off following European Union sanctions on it.

“In the medium term, refiners are already adjusting. We're seeing a shift toward non-designated Russian entities, more use of opaque trading channels, and increased sourcing from the Middle East, West Africa, and the Americas,” Ritolia said adding that on the Russian side, the response has been highly adaptive, involving ship-to-ship transfers near Mumbai, mid-voyage diversions, and more complex logistics to keep barrels moving and increase discounts.