India’s crude bill drops to $30.6 Bn, but sanctions threaten Russian oil flow

India’s crude oil import bill dropped 18.6% to US$ 30.6 billion in Q1 FY26, driven by increased imports of discounted Russian oil, despite stable volumes. Russia’s share surged from 2–3% in 2020 to nearly 38% in 2023–24, reshaping India’s crude mix away from the Middle East. However, potential US secondary sanctions may disrupt this trend. 

India remains firm on sourcing, prioritizing consumer needs. Analysts caution that sanctions could raise costs and impact margins. Still, Russia is expected to remain India’s top supplier, while India continues diversifying sources—including the US, Africa, and Latin America—to balance cost, risk, and long-term energy security.

India’s crude oil import bill saw a notable drop of 18.6% in the first quarter of FY 2025–26, totaling US$30.6 billion, down from US$37.6 billion during the same period last year, according to the data from Petroleum Planning and Analysis Cell. This decline occurred despite stable import volumes, primarily due to increased purchases of discounted Russian crude oil.

During April–June 2025, the country imported 62.1 million tonnes of crude, a figure nearly identical to the same period in FY24. However, the overall cost fell thanks to favourable pricing, particularly from Russia. With around 85% of its crude oil needs met through imports, India has leaned heavily on Russian supplies since the onset of the Ukraine war in 2022. Sanctions imposed by the West on Russia allowed India to access these barrels at significant discounts, helping conserve foreign exchange.

This strategic shift in sourcing is more than a temporary adjustment; it marks a structural transformation in India’s crude procurement strategy. 

According to analysts, Indian refiners have overhauled their processing systems to accommodate higher volumes of Russian grades like Urals and ESPO. This has involved recalibrating crude assays, modifying Crude Distillation Unit (CDU) configurations, and adopting blending strategies to integrate Russian oil into India’s refinery operations. The result has been a move away from Middle Eastern crude dependence toward a more balanced mix drawing from both Atlantic and Pacific sources.

Before the Ukraine conflict, Russian crude comprised just 2–3% of India’s imports in 2020–21. This figure surged to about 16% in 2022, and by 2023–24, Russia’s share had climbed to nearly 36%, surpassing all other traditional suppliers. The sharp rise highlights India’s price-driven strategy, capitalizing on discounted Russian oil amid a global energy reshuffle.

Meanwhile, the shift has diminished the market share of other suppliers, particularly Saudi Arabia. Once one of India’s leading crude sources, Saudi Arabia’s share fell from 18% in 2020 to about 13% by 2024. This erosion is attributed to both Russia’s aggressive pricing and India’s broader effort to diversify its crude sourcing.

Despite the decline in value terms, India’s dependence on imported crude slightly increased, with the import share rising to 81.3% during April–June, compared to 80.2% a year earlier. This increase reflects rising domestic demand. In June alone, crude imports rose to 19.8 million tonnes, up from 18.8 million tonnes the previous year. However, the import bill for June fell by 13% to US$9.7 billion, again illustrating the impact of discounted Russian oil. Notably, India’s oil imports have surged from US$ 64.6 billion in 2020 to US$ 143.3 billion in 2024, showing a CAGR of 17.3% during the period 2020 to 2024.

However, these economic gains may soon come under threat. The United States recently signalled its intention to impose 100% tariffs on Russian oil and “secondary sanctions” on nations that continue to import it—primarily targeting India and China—if Russia fails to agree to end the Ukraine war within 50 days. NATO Secretary General Mark Rutte echoed this pressure with warnings of sweeping sanctions.

India, however, remains firm in its position. 

According to Oil Minister Hardeep Singh Puri, India would continue to buy oil from any country that supports the needs of Indian consumers. This signals India’s unwillingness to yield to Western pressure, at least for now.

Still, analysts caution that should secondary sanctions materialize, India’s crude procurement strategy could face significant disruption. Restricted access to discounted Russian barrels would increase import costs and reduce the margins of public-sector refiners who have been benefiting from high gross refining margins (GRMs) by converting cheap Urals into profitable diesel, especially during periods of strong crack spreads.

Since 2022, the increased intake of Russian crude has changed India’s overall crude profile. This shift has affected product yields, such as increasing output of vacuum gas oil (VGO), requiring refiners to adjust operations in FCC and hydrocracker units to maintain product balances. Nevertheless, many Indian refineries continue to favour Russian grades for their cost advantage.

However, analysts forecasts that Russia will likely retain its position as India’s top crude supplier, with a projected share of 35–40%, as long as price and processing feasibility hold. Heightened Western enforcement could affect financial and shipping intermediaries, which may lead to a decline in Russian oil volumes or push Indian refiners to strengthen their compliance frameworks.

In such a scenario, Indian refiners may be forced to diversify further, potentially sourcing from the Middle East, Latin America, West Africa, or even Canada. Imports from the Middle East are expected to remain stable in the 35–40% range, with Iraq, Saudi Arabia, and the UAE continuing to play pivotal roles. India is likely to strengthen partnerships with other oil producers, such as the US and African countries, to balance refining efficiency, manage geopolitical risks, and ensure long-term energy security.

In essence, India’s current crude import approach underscores a pragmatic blend of economic necessity and strategic foresight. While Russian oil has provided short-term gains, changing geopolitical dynamics may require recalibration of sourcing strategies to safeguard energy stability and affordability.