Highlights:
- India’s crude oil imports from Russia dropped 13.17% in February due to new U.S. sanctions on Russian oil producers and tankers.
- Saudi Arabia, Iraq, and Latin American countries stepped in to offset the shortfall.
- Colombia, Brazil, and Mexico saw a sharp rise in exports to India, with Argentina entering the Indian market for the first time.
- India’s total crude oil imports stood at 4.91 million barrels per day (bpd) as of February 23, slightly lower than 5 million bpd in January.
- India’s fuel demand is projected to rise by up to 8% in FY26, driven by higher consumption of liquefied petroleum gas (LPG) and transportation fuels.
India’s Shift in Oil Sourcing Amid Russian Supply Challenges
India, the third-largest oil importer and consumer globally, has been a key buyer of Russian crude oil since 2022. However, recent U.S. sanctions on Russian oil firms and tankers have disrupted India’s supply chain, forcing it to seek alternative sources.
What Are U.S. Sanctions on Russian Oil?
- The United States imposed new sanctions on January 10, 2025, targeting Russian oil producers Gazprom Neft and Surgutneftegas.
- The sanctions also blacklisted about 180 shadow fleet tankers, used to transport Russian oil under opaque conditions to avoid price caps and trade restrictions.
- The primary goal of these sanctions is to cut off Moscow’s revenue sources, which the U.S. claims are used to fund the Russia-Ukraine war.
How Did India’s Russian Oil Imports Decline?
- India’s crude oil imports from Russia dropped to 1.45 million bpd till February 23, compared to 1.67 million bpd in January, marking a 13.17% decline, according to commodity market analytics firm Kpler.
- Russia remains India’s largest oil supplier, but ongoing sanctions have created uncertainty in future trade volumes.
Middle Eastern Suppliers Fill the Supply Gap
To compensate for the decline in Russian oil imports, India increased its crude oil purchases from the Middle East, particularly from Saudi Arabia and Iraq.
Key Oil Suppliers and Their Contribution:
- Saudi Arabia: Increased crude oil exports to India by 10%
- February imports stood at 790,000 bpd, up from 720,000 bpd in January.
- Saudi Arabia remains India’s second-largest oil supplier.
- Iraq: Oil supply remained steady, continuing to be a reliable partner for India’s energy needs.
- United States: Exports to India declined to 177,000 bpd in February, from 293,000 bpd in January, possibly due to price competitiveness and logistical constraints.
Latin America Gains as India Expands Crude Oil Sources
India’s energy diversification strategy has led to a sharp increase in crude oil imports from Latin American nations, including Colombia, Brazil, and Mexico.
- Colombia: Oil exports to India surged 196% in February, making it a key non-OPEC supplier.
- Brazil: Exports jumped 92%, strengthening energy ties with India.
- Mexico: Shipments increased by 28.35%, reinforcing its role as an emerging supplier.
- Argentina: Entered the Indian crude oil market for the first time, supplying 30,000 bpd under a 1-million-barrel contract with Bharat Petroleum Corporation Limited (BPCL).
Understanding Oil Market Terms
1. Barrels Per Day (bpd)
- A standard measurement unit used to quantify oil production and consumption.
- India’s total crude oil imports stood at 4.91 million bpd in February, slightly below 5 million bpd in January.
2. OPEC (Organization of the Petroleum Exporting Countries)
- A coalition of 13 oil-producing nations, including Saudi Arabia and Iraq, which influences global oil prices and supply.
- Non-OPEC suppliers such as Colombia, Brazil, and Mexico are playing an increasing role in India’s oil strategy.
3. Shadow Fleet Tankers
- These unregistered or disguised oil tankers help nations like Russia bypass Western sanctions by operating in restricted trade routes.
- U.S. sanctions on 180 shadow tankers have made it harder for India to import Russian oil at discounted rates.
India’s Energy Demand Outlook
Despite supply disruptions, India’s energy demand remains strong, driven by economic growth and rising fuel consumption.
- Total crude oil imports stood at 4.91 million bpd till February 23, reflecting steady demand.
- Auto fuel consumption in January 2025 matched October 2024 levels but showed annual growth.
- India’s fuel demand is expected to grow by up to 8% in FY26, fueled by higher consumption of liquefied petroleum gas (LPG) and transportation fuels.
Expert Insights on India’s Oil Market Trends
Sumit Ritolia, Senior Oil Refining Analyst at Kpler, emphasized India’s resilience in the global oil market, stating:
“January demand reached 5.26 million bpd, slightly down from December but higher year-on-year, driven by robust LPG and transportation fuel sales. Crude imports remain strong to meet rising domestic needs, reinforcing India’s position as a key driver of global refined product growth.”
India’s Strategic Adaptation in a Volatile Market
India’s ability to adapt to geopolitical shifts by diversifying its crude oil sources highlights its strategic resilience in managing energy security. With Middle Eastern and Latin American suppliers stepping in, the country is ensuring a steady flow of crude oil despite disruptions in Russian shipments.
Going forward, India’s energy policy will continue to balance economic growth, energy diversification, and price competitiveness to sustain its position as one of the world’s largest crude oil importers.
