Signs of pullback: Sharp drop in Russia oil exports to India after US sanctions

As expected, the crash in exports is driven by lower dispatches from Rosneft and Lukoil, which account for over half of Russia’s oil production and exports, and used to make up over two-thirds of India’s Russian oil imports. Exports to India from Rosneft—Russia’s largest oil company—plunged to 0.81 million bpd in the week to October 27 from 1.41 million bpd in the previous week. For Lukoil, no dispatches to India were recorded in the week to October 27, as against 0.24 million bpd in the previous week.

Given that the journey time for tankers transporting Russian crude to Indian ports through the Suez Canal—the main supply route—could be up to a month, the fall in oil exports from Rosneft and Lukoil appear consistent with the November 21 deadline prescribed by Washington for all dealings with the two companies to be wound down. Till then, Russian oil deliveries at Indian ports are expected to remain robust. Deliveries remained robust in October as this oil would have been contracted weeks before the US hit Rosneft and Lukoil with sanctions.

With the US imposing sanctions on Rosneft and Lukoil, India’s Russian oil imports are set to drop drastically. Refiner HPCL-Mittal Energy (HMEL) has already announced a suspension in Russian oil imports, while India’s largest refiner Indian Oil Corporation said it will comply with all sanctions imposed by the international community, but declined to comment directly on the future of the company’s Russian oil imports. Private sector giant RIL, which accounts for around half of India’s Russian oil imports, said it was assessing the implications and compliance requirements following the sanctions, and will be “complying fully” with any guidance on the issue from the Indian government.

Russia’s oil exports to India.

The threat of secondary sanctions from the US is the reason why countries like India, while politically opposed to unilateral economic sanctions, usually steer clear of countries and other entities sanctioned by Washington. While primary sanctions—on Rosneft and Lukoil in this case—mainly curtail or prohibit the engagement of American citizens and entities with the sanctioned entities, secondary sanctions seek to limit the engagement of other countries and their entities—over whom the US has no legal control—with the target country or entity. Oil industry insiders said companies and banks are likely to exercise abundant caution to ensure they do not attract secondary sanctions.

“Following the sanctions, we observed accelerated Russian crude arrivals ahead of the deadline, with no refiner except Nayara (which has Rosneft in its promoter group) expected to import from sanctioned suppliers thereafter. Russian crude flows are likely to remain around 1.6–1.8 million bpd until November 21, before tapering as refiners avoid potential OFAC-related exposure. While Indian refiners will continue sourcing Russian grades via unsanctioned intermediaries, they are expected to proceed with greater caution,” said Sumit Ritolia, Lead Research Analyst, Refining & Modeling at Kpler.

OFAC—Office of Foreign Assets Control—of the US Department of the Treasury administers and enforces economic and trade sanctions imposed by Washington. In October, India’s Russian oil imports averaged at 1.62 million bpd, a tad higher than 1.61 million bpd in September. Russian crude accounted for almost 34 per cent of India’s total oil imports in October.

“December–January imports of Russian crude should see a notable dip as refiners assess the impact and rebuild supply chains. Despite the short-term turbulence, a complete halt in Russian imports remains unlikely, given attractive margins and India’s geopolitical stance. Unless refiners themselves face direct sanctions or the Government of India imposes formal restrictions—both improbable scenarios—Russian barrels will continue flowing to India, though via more complex logistical, financial, and trading arrangements,” Ritolia said.

Considering that other Russian oil exporters and intermediary traders dealing in Russian crude have not been sanctioned by Washington, some volumes of Russian oil could still find their way to India, although nowhere close to that seen over the past three years. Russia is currently India’s largest source of crude, accounting for over 35 per cent of India’s overall oil imports so far in 2025. Majority of Russian crude oil flowing to India was being imported by private sector refiners RIL and Nayara Energy.

The latest move from the Donald Trump administration—which had so far not imposed direct sanctions on Russian oil majors even as it pressured New Delhi to cut oil imports from Moscow—is a major escalation in its bid to force the Kremlin’s hand into ending the war in Ukraine. Historically, India has avoided oil imports from countries like Iran and Venezuela, whose oil was sanctioned by the US, and industry watchers and experts expect a similar approach on oil from Rosneft and Lukoil. Given Indian refiners’ and banks’ exposure to the US—from dollar-denominated trade to access to the American financial system and markets—potential secondary sanctions could have a significant impact on them.

To offset reduced direct Russian inflows, Indian refiners are expected to increase procurement from West Asia, West Africa, Latin America, and North America. India is the world’s third-largest consumer of crude oil and depends on imports to meet around 88 per cent of its requirement.

“Overall, refiners are likely to broaden their import baskets, with higher inflows from Latin America (Brazil, Argentina, Colombia, Guyana), West Africa, and the Middle East. While near-term Russian imports may dip starting December loadings, Russian barrels will continue reaching India through intermediaries,” Ritolia said.