India Reassesses Russian Oil as Geopolitical Pressures Escalate

Indian state-owned refiners recently halted Russian crude purchases, an indication of enhanced caution after taking cues from international policy and changing market dynamics, according to World of Petroleum and Bitumen (WPB). This occurrence indicates broader reassessment of energy policies under the pressures of diplomacy and vanishing economic advantages.

India's big public sector refiners; Indian Oil Corporation (IndianOil), Bharat Petroleum Corporation (BPCL), Hindustan Petroleum Corporation (HPCL), and Mangalore Refinery and Petrochemicals (MRPL); collectively have refrained from making new orders of Russian oil. The firms, contributing collectively above 60% of the country's refining capacity, have been consistent Russian crude buyers imported directly. Nevertheless, an altered buying behavior indicates growing doubt over the fate of these shipments.

In lieu of Russian feedstocks, the state refineries have turned elsewhere, expanding their Middle East and West Africa spot market buying. This trend appears to be driven by declining enthusiasm for Moscow's formerly competitively discounted prices and by increasing concern about potential trade effects.

India, the world's third-largest crude importer, more than doubled its Russian oil imports from 2022, when Western sanctions reoriented global petroleum flows. Russia promptly became India's largest oil supplier, supplying nearly one-third of its import demand. However, the recent shift marks a potential turning point for the two nations' energy relationship.

While state-owned players have reduced, India's private sector players, Reliance Industries and Nayara Energy particularly, are still significant Russian crude buyers. But neither are they immune to fresh looming challenges. Nayara, with a part ownership by Russian oil firm Rosneft, has increasingly struggled to sell its refined production abroad, further compounded by new sanctions by the European Union.

The uncertainty deepened further after new tariff threats on Indian goods and a stated intention to punish countries with strong defense and energy ties with Russia. Such a policy orientation, along with shock voiced on social media by senior political leaders, has prompted Indian refiners to look for urgent clarification from the country's oil ministry on how to handle any future Russian shipments.

As geopolitical imperatives shift and economic incentives vary, India's refiners appear to be weighing the long-term impact of their procurement strategies with more caution. The situation remains fluid, with state as well as private entities anticipating clearer regulatory and trade regimes that will determine the next phase of crude oil procurement.

By WPB

Bitumen, Crude, Oil, Petroleum