Indian oil refiners are scrambling to secure alternative supplies as U.S. sanctions disrupt the country’s growing reliance on Russian crude. To make up for the shortfall, state-owned processors have turned to the spot market, sourcing oil from regions including the Middle East, Africa, and the U.S. Some of these shipments are set to load as early as February, signaling the urgency of replacing Russian barrels amid the latest wave of sanctions.
This rush for alternatives stands in contrast to the more optimistic views expressed by senior Indian officials, who have remained confident that Russian crude will continue flowing as Moscow adapts, potentially using its dark fleet to bypass sanctions. Despite this, the immediate challenge is clear: India must find a way to replace up to 1.8 million barrels per day—about a third of its total crude imports.
Refiners are also renewing discussions with traditional long-term suppliers, such as Saudi Arabia and Abu Dhabi. Traders report that talks are likely to be tense as Indian companies, after two years of buying discounted Russian crude, now face the prospect of reestablishing relationships with OPEC producers. The shift back to these suppliers comes as refiners seek stability, but there are concerns that sanctions enforcement could complicate transactions, especially if Indian firms inadvertently violate punitive measures targeting Russian entities.
In response, major players like Saudi Aramco and Abu Dhabi National Oil Company (ADNOC) have entered supply negotiations with Indian refiners, with discussions reportedly focused on securing long-term contracts for fiscal year 2025-2026.
India’s Oil Minister, Hardeep Singh Puri, also suggested that the country might look to increase imports from the U.S., highlighting plans from the previous U.S. administration to boost oil output. Additionally, Puri mentioned a potential deal with Argentina, though traders are skeptical about its likelihood of yielding significant volumes of crude.
Last year, Russia became India’s largest oil supplier by volume, surpassing traditional suppliers like Iraq, Saudi Arabia, and the UAE, according to analytics firm Kpler. This marks a stark shift from 2021, when Russia’s crude exports to India were virtually nonexistent. As India navigates the complexities of replacing Russian crude, the country faces a difficult balancing act in securing new supplies while managing geopolitical and market risks.
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