India’s refining sector is undergoing a significant strategic recalibration as New Delhi moves to ease tensions with Washington by signalling a gradual reduction in its crude oil purchases from Russia. This marks a clear pivot in energy sourcing strategy, even as supply realities and contractual obligations make an abrupt change implausible.
Last week, the United States announced the rollback of a punitive 25 percent tariff that had been imposed on Indian imports in response to sustained purchases of discounted Russian crude. Trump's order rescinding the tariff also ties its restoration to India’s future decisions on Russian oil imports, effectively placing New Delhi under ongoing scrutiny from US trade authorities.
For Indian refiners, the tariff rollback has acted as a catalyst for adjusting crude supply strategies. Several major state and private refiners, including Indian Oil Corporation and Bharat Petroleum Corporation, have reportedly declined new offers of Russian crude for deliveries in April and beyond, even as previously scheduled shipments proceed. Shipments of Russian volumes have already declined markedly from their mid-2025 highs.
Yet the transition is measured. India remains one of the world’s largest crude importers, and its refining complex has been structured over years around specific crude grades. Russian Urals and similar heavy crude grades offered deep discounts relative to global benchmarks, underpinning margins for India’s complex refineries. Analysts caution that the bulk of existing contracts — typically finalised six to eight weeks ahead — will keep Russian crude flowing into the system in the near term.
The current trading level of the Indian rupee at around ₹90.60 to the US dollar highlights the broader economic backdrop against which these changes are unfolding. A higher import bill from diversified sources will add pressure to India’s external accounts and refine margins, with refined petroleum and energy costs increasingly linked to dollar prices.
Diversification is already under way. Indian refiners are increasingly sourcing crude from the Middle East, West Africa and South America, and Reliance Industries recently purchased Venezuelan barrels for the first time in nearly a year. These moves reflect both commercial imperatives and geopolitical balancing.
Even as India reduces Russian crude imports, Nayara Energy remains a notable exception, constrained by legacy ties with Russia’s Rosneft and sanctions that limit its sourcing options. Washington has been briefed on this situation, and New Delhi may seek exemptions or special dispensation for the firm under any future import-restriction framework.
Market analysts and government officials alike emphasise that India is steering a careful course — balancing the pursuit of a broader trade deal with the United States against its energy security needs. While the rollback of the 25 percent tariff underscores progress in bilateral ties, the evolution of India’s crude import strategy will remain a gradual, not sudden, process.
