India’s state refiners keep buying Russian oil despite US tariff pressure

State-owned refiners in India continue to purchase Russian crude oil even as New Delhi seeks relief from US tariffs imposed over those imports, said a CNBC report citing energy analysts.

The ongoing buying highlights the complexity of India’s energy strategy as it balances domestic fuel demand, pricing considerations, and growing geopolitical pressure from Washington.

The United States imposed a “secondary” 25% tariff on Indian goods in August, citing New Delhi’s continued imports of Russian crude.

In late November, Washington also sanctioned major Russian oil companies Lukoil and Rosneft, tightening restrictions on Moscow’s energy sector amid the war in Ukraine.

US tariffs and diplomatic pressure

Pressure on India intensified over the weekend when US Senator Lindsey Graham stated that India’s Ambassador to the United States, Vinay Mohan Kwatra, had requested that he urge President Donald Trump to lift the tariffs.

According to Graham, the ambassador argued that New Delhi had reduced its purchases of Russian oil.

Speaking to reporters aboard Air Force One on Sunday, Trump warned that the United States could raise tariffs further if India fails to curb its purchases of Russian crude.

India has faced sustained pressure from Washington to scale back imports that provide a key economic lifeline for Russia in the face of Western sanctions.

Despite this, official data and analyst estimates suggest that while India’s overall demand for Russian oil has declined, state-owned refiners continue to play a stabilising role in maintaining import volumes.

Shifts in private and state-owned buying

Analysts noted that the drop in India’s Russian crude imports in recent months has been driven largely by reduced buying from Reliance Industries, owned by billionaire Mukesh Ambani.

Reliance had been a major importer of Russian oil before US sanctions on Lukoil and Rosneft took effect in late November.

State-owned refiners, known as public sector undertakings (PSUs), have offset part of that decline, analysts said.

Companies such as Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL), and Hindustan Petroleum Corporation have continued to source Russian crude, often through non-sanctioned suppliers.

“State-owned Indian firms like IOC and BPCL have continued to buy Russian crude for future delivery, through non-sanctioned suppliers,” said Muyu Xu, a senior crude oil analyst at tanker tracking firm Kpler in the report.

Import trends and market outlook

Data from energy consultancies show a mixed picture.

Rystad Energy estimates that India’s Russian crude imports fell by around 300,000 barrels a day since November, dropping to about 1.7 million barrels a day on a sequential basis.

However, the firm expects a “modest recovery” to around 1.8 million barrels a day in January.

“Despite declining aggregate imports, PSU refinery intake of Russian crude has remained resilient, highlighting a redistribution rather than a collapse in demand,” said Pankaj Srivastava, senior vice president of commodity markets at Rystad Energy.

He added that public sector refiners continue to process Russian crude with a slight upward trend, driven by domestic fuel demand and pricing economics.

Kpler’s data pointed to a steeper short-term decline. “India’s imports of Russian crude fell by 595,000 barrels per day month-on-month in December, dropping to 1.24 million barrels per day—the lowest level since December 2022,” the firm said.

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