India Shifts Crude Sourcing Towards Middle East Amid Russian Supply Risks
India is increasingly sourcing crude oil from the Middle East, reducing its reliance on Russia due to rising US sanctions and compliance issues. While Russian imports decreased in early 2026, with Middle Eastern suppliers like Iraq and Saudi Arabia gaining share, the shift is considered a short-term realignment. Despite logistical hurdles, discounted Russian crude remains economically attractive for refiners, who are balancing cost-effectiveness with supply reliability and execution complexity, purchasing from non-sanctioned entities where possible.
India's crude oil sourcing strategy is experiencing a clear shift towards lower-risk and more execution-reliable supply, with Middle Eastern barrels gaining prominence. This pivot comes as Russian crude flows, while still present, are becoming increasingly selective and compliance-driven due to fresh US sanctions on key suppliers like Rosneft and Lukoil. In the first three weeks of January 2026, Russian crude imports dropped to around 1.1 million barrels per day (bpd), down from 1.21 million bpd in December and over 2 million bpd in mid-2025. Conversely, traditional Middle Eastern suppliers have seen increased volumes, with Iraq supplying volumes nearly equal to Russia and Saudi Arabia's volumes rising significantly.The initial surge in Russian oil imports in 2022 was driven by heavily discounted barrels after Western sanctions following the Ukraine invasion, pushing Russia's share to roughly 40% of India's imports at its peak. However, the recent US sanctions have raised compliance and execution risks, leading some refiners to temporarily halt Russian imports. Despite these challenges, Russian crude, particularly Urals, remains compellingly priced, offering significant discounts of $5-7 per barrel below Oman/Dubai grades, which continues to support refinery margins for those able to manage the associated risks. Experts view this adjustment as a near-term disruption rather than a complete departure from Russian oil, with projected Q1 2026 Russian crude purchases averaging 1.3-1.5 million bpd. The rebalancing reflects India's dual focus on energy security, diversification, and refinery economics, prioritizing supply reliability, flexibility, and smoother cargo execution while still leveraging economical options.
