India Faces Crude Sourcing Challenge After US Sanctions on Rosneft and Lukoil
Indian refiners are likely to pause new Russian crude import deals due to US sanctions on Rosneft and Lukoil, but existing flows may continue as finding alternatives is challenging. The sanctions, effective November 21, 2025, could raise India's import costs and impact refining margins, prompting refiners to diversify sources.
Indian refiners are expected to hold off on new Russian crude import contracts following US sanctions on Rosneft and Lukoil, which take effect on November 21, 2025. While flows are unlikely to stop abruptly, sourcing alternative crude for existing volumes poses a significant challenge. India, the world's third-largest oil importer, relies on Russia for about 35% of its crude needs. The sanctions have prompted refiners to diversify their import baskets, increasing purchases from Colombia, Canada, and the Middle East. However, most Indian refiners have enjoyed a 40% Urals crude diet with hefty discounts, and a shift away from Russian oil could reduce refining margins and raise import costs. The government is expected to maintain dialogue with Washington to secure a glide path that preserves energy affordability while avoiding a rupture with the US. The latest sanctions also impact crude flows to Rosneft-backed Nayara Energy, already under EU sanctions. Refiners are exploring options, including long-term frame contracts and routing discounted barrels through non-sanctioned producers, but the transition will be complex and costly.
