India's Russian oil imports hit record 50.83% share as sanctions loom

India's dependence on Russian crude surged to a record in July, with shipments making up 50.83 percent of imports — or 2.47 million barrels per day — as Iran war disruptions outweighed sanctions risk.

Indian refiners had begun cutting Russian purchases in January to avoid higher US tariffs as New Delhi negotiates a trade deal with Washington, but disruptions to Middle East supply triggered by the Iran war compelled them to keep buying Russian barrels, according to data from trade sources compiled by Reuters.

Russia's share of India's crude imports hit a record 43.25 percent in the first four months of the financial year that began in April, averaging more than 2 million bpd, up from about 37 percent a year earlier. The shift came largely at the expense of Middle Eastern suppliers, whose share fell to about 30 percent in the April-July period from 43 percent a year earlier. Latin American oil's share rose from 3.5 percent to 12.7 percent, driven by higher imports from Brazil and Venezuela.

India relies on imports for more than 90 percent of its crude oil needs, making it vulnerable to disruptions in global oil trade. The record dependence on Russian barrels now faces a fresh threat: legislation passed by the US Senate this month to impose 100 percent tariffs on buyers of Russian oil, stepping up economic pressure on Moscow over its 2022 invasion of Ukraine. The House of Representatives has yet to approve the measure.

Middle East share falls to 30% as Russia, UAE gain

Russia remained India's largest crude supplier during the April-July period, while the United Arab Emirates overtook Iraq to become the second-largest supplier. The UAE, which exited OPEC in April, has been offering large volumes through spot tenders, allowing Indian refiners to increase purchases. Last year, the UAE was India's No. 4 supplier.

The shift in India's import mix reflects a broader reconfiguration of global crude flows. Russian barrels, which have consistently traded at a discount to Brent, have become increasingly attractive to price-sensitive Indian refiners. At the same time, the Iran war has disrupted Middle East supply routes, including through the Strait of Hormuz, forcing buyers to diversify.

India's fuel consumption rose about 3 percent in July to 19.92 million metric tons, its highest level since March, according to data from the Petroleum Planning and Analysis Cell of the oil ministry. The demand growth highlights the scale of India's energy needs and its reliance on a diversified import base to meet them. State-run refiners Hindustan Petroleum Corp and Mangalore Refinery and Petrochemicals Ltd are seeking up to a combined 6 million barrels of oil through spot tenders, documents show.

US tariff threat clouds the outlook

The US Senate's passage of legislation to impose 100 percent tariffs on buyers of Russian oil represents the most significant escalation in economic pressure on Moscow since the 2022 invasion of Ukraine. If the House approves the measure, Indian refiners would face a stark choice: absorb the tariff cost, shift to alternative suppliers, or negotiate exemptions as part of the ongoing US-India trade talks.

The last time Washington imposed sweeping energy sanctions on Russia, in early 2022, India initially reduced purchases before ramping them up as discounts widened. The current situation differs: the Iran war has tightened Middle East supply, limiting India's alternatives even as the tariff threat grows.

For Indian refiners, the calculus is straightforward. Russian crude has consistently traded at a discount to Brent, making it the most cost-effective option for a country that imports more than 90 percent of its oil needs. But the 100 percent tariff threat could erase that advantage entirely, forcing a rapid reallocation of supply chains at a time when global crude availability remains constrained.

The outcome of the House vote and the trajectory of US-India trade negotiations will determine whether India can sustain its current import mix or must undertake another rapid shift in sourcing. With the Iran war continuing to disrupt Middle East supply, the margin for error is thin.

This article is for informational purposes only and does not constitute investment advice.