India Cuts Russian Oil Purchases as Price Advantage Narrows

Higher Russian crude prices, stronger Chinese demand and competitive Middle Eastern supplies reshape India’s import strategy

New Delhi (SDNA): India’s long-running appetite for discounted Russian crude appears to be losing some momentum as changing market conditions make supplies from Moscow less financially attractive.

Indian refiners have reportedly reduced their purchases of Russian crude for November delivery, but the shift should not necessarily be interpreted as a direct response to pressure from Washington or warnings over tariffs. Industry sources indicate that the more immediate factor is economics: the discount that once made Russian barrels highly attractive has narrowed substantially, while alternative supplies from the Middle East have become increasingly competitive.

The Discount That Changed the Equation

Russian Urals crude became a major attraction for Indian refiners after the Russia-Ukraine war disrupted traditional oil trade flows. Deep discounts allowed Indian companies to secure large volumes while maintaining favorable refining economics.

That advantage, however, has weakened.

According to market-linked information, Russian crude has recently traded at a premium of more than $10 per barrel over dated Brent in some transactions. With the price gap narrowing or disappearing, the commercial incentive for Indian refiners to prioritize Russian supplies has correspondingly declined.

For refiners, the calculation is straightforward: when alternative crude can be sourced at competitive prices and with lower freight costs, the appeal of Russian barrels naturally falls.

China Adds Pressure to the Russian Crude Market

India is also facing stronger competition from China, another major buyer of Russian oil.

Growing Chinese demand has increased competition for available Russian cargoes that were previously more readily accessible to Indian refiners. Analysts also point to tighter access to Iranian crude as one factor that may be encouraging Chinese buyers to seek additional Russian supplies.

The result is a more competitive market for Russian barrels across Asia, with prices reflecting the increased demand.

Russia’s Share in India’s Imports Has Fallen

Russia had emerged as India’s largest crude oil supplier after the 2022 geopolitical upheaval, at times accounting for more than half of India’s crude imports.

Recent data, however, indicate a significant decline.

Kpler data cited in market reports suggest that Russia’s share of India’s crude imports fell from around 56% in July to approximately 35% in September. Average Russian crude shipments to India during the four weeks through October 4 were reportedly around 310,000 barrels per day, among the lowest levels recorded since March 2022.

The numbers indicate that Indian refiners are increasingly balancing Russian purchases with supplies from other regions.

Is Washington Really Driving the Change?

The possibility of US pressure remains an important part of the broader geopolitical backdrop.

Washington has repeatedly scrutinized India’s purchases of Russian crude, while sanctions and the possibility of additional tariffs have increased the risks associated with buying from Moscow.

However, people familiar with the matter reportedly indicate that the Indian government has not directly instructed refiners to reduce Russian purchases because of US tariff threats.

That distinction is important.

Rather than representing a sudden political break with Russia, the current decline appears to have a strong commercial explanation. Indian refiners are ultimately comparing the landed cost, availability and risk associated with every barrel.

Middle Eastern Suppliers Regain Their Edge

As Russian discounts have narrowed, crude from the Middle East has become more competitive for Indian buyers.

Geography plays a major role. Gulf suppliers are considerably closer to India than Russia’s key export terminals, potentially reducing shipping distances and freight expenses.

With tanker rates also influencing the final landed cost of crude, the economics of shorter-haul Middle Eastern supplies have become increasingly attractive.

This has given Indian refiners greater flexibility to rebalance their crude portfolios.

India’s Post-2022 Oil Strategy Is Evolving

The global oil trade changed dramatically after Russia invaded Ukraine in 2022.

Western sanctions disrupted Russia’s traditional European customer base, forcing Moscow to redirect substantial volumes toward Asian markets. India quickly emerged as one of the biggest buyers, taking advantage of discounted Russian crude to reduce its import costs.

That strategy proved highly beneficial for Indian refiners.

But the market is no longer the same.

India is now seeking greater flexibility by sourcing crude from Russia, the Middle East, the United States and other producers, depending on prices, availability and shipping economics.

This Looks More Like Business Than a Policy U-Turn

The latest developments suggest that India’s oil strategy is being driven less by loyalty to any particular supplier and more by a constantly changing commercial equation.

Russian crude remains an important part of India’s energy mix, but its advantage has weakened as discounts shrink and competition for Russian barrels increases.

At the same time, Middle Eastern suppliers are offering increasingly competitive alternatives, while India continues to diversify its sources to manage geopolitical and supply risks.

For now, therefore, the reduction in Russian oil purchases appears less like a dramatic geopolitical realignment and more like a calculated response to changing prices, freight costs, supply availability and market risks.

For India’s refiners, the message is simple: the cheapest and most commercially viable barrel will continue to get the order—regardless of where it comes from.

(SDNA)