Informist, Friday, Aug. 1, 2025

--Kpler: India's crude oil imports in July at 4.7 mln bpd, steady on month

--Kpler: India's crude oil imports from Russia in July at 1.6 mln bpd

--Kpler: India's crude oil imports from Russia down 24% on month, 23% on yr

--Kpler: Iraq 2nd largest crude oil supplier to India in July at 926,000 bpd

--Kpler:Saudi Arabia 3rd largest oil supplier to India in July at 702,000 bpd

By Pallavi Singhal and Ashutosh Pati

NEW DELHI/MUMBAI – India's crude oil imports from Russia took a significant hit in July, data shared by Kpler shows. The drop was because of seasonal refinery maintenance and weaker monsoon-driven demand during the month, the ban announced by the European Union on imports of fuels made from Russian crude oil in third countries like India, and tariff threats by US President Donald Trump, it said. Kpler is a data and analytics provider for global trade, specialising in energy and shipping markets.

The EU's sanctions, which will come into effect from January, will force Indian refiners to segment crude intake and product flows, while the US threat of a 25% tariff plus penalty on India over continued Russian oil imports raises the possibility of secondary sanctions that would directly impact the shipping, insurance, and financing lifelines, underpinning India's Russian oil trade, Sumit Ritolia, lead research analyst-refining and modelling at Kpler, said.

In July, India's total oil imports were steady month-on-month at 4.7 million barrels per day. However, crude imports from Russia were down 24% month on month and 23% year on year at 1.6 million barrels per day. Russian crude accounted for nearly 34% of India's oil import basket in July, down from around 45% in June.

West Asia continued to play a significant role in India's crude oil imports in July. Iraq was India's second-largest supplier, supplying 926,000 barrels per day of crude, followed by Saudi Arabia at 702,000 barrels per day, and the United Arab Emirates at 446,000 barrels per day.

Russian crude oil has remained highly competitive due to discounts, flexible payment mechanisms, and logistical adaptability through alternative shipping and insurance networks. Despite mounting Western sanctions aimed at curbing Russia's energy revenues, Indian refiners had, till June, managed to maintain and even expand their procurement from Russia.

However, following Trump's current threats, refiners like Reliance Industries Ltd. and Nayara Energy Ltd., which account for a bulk of India's Russian crude imports, now face significant challenges, Ritolia said. These private refiners, especially Russian oil giant Rosneft-backed Nayara Energy that operates the 20-million-tonne-per-annum Vadinar refinery in Gujarat and Reliance Industries with its exposure to the EU market, stand to be the most exposed. Import data for July indicates a pullback in Russian barrels, especially among state refiners, signaling a preemptive diversification underway, Ritolia said.

Ritolia points out that replacing Russian crude isn't easy and is likely to be logistically daunting, economically painful, and geopolitically fraught. Supply substitution may be feasible on paper, but it remains fraught in practice, he said. Even though supplies from West Asia will be the logical fallback, they come with their own problems attached. "Gulf barrels come with pricing rigidity, African grades add freight volatility, and Latin American flows face availability constraints," Ritolia said.

A web of permutations and combinations is being explored behind the scenes, with active consultations underway between government ministries, suppliers, and refinery planners, according to Ritolia. "The challenge is not just to keep crude flowing, but to do so without blowing a hole in margins or destabilising product economics."

IMPORT BILL

The implications of this shift are massive, with India's import bill potentially swelling by $9 billion to $11 billion annually if it loses a $5 per barrel discount across 1.8 million barrels per day, Ritolia said. If global prices rise further due to reduced availability of Russian oil, the cost could be even higher. This would increase fiscal strain, particularly if the government steps in to stabilise retail fuel prices, and have a cascading impact on inflation, currency, and monetary policy, he said.

OUTLOOK

In the short term, Ritolia expects Indian refiners to continue diversifying, leaning more on Gulf and African suppliers and reducing Russian-linked exposure in export streams. However, in the longer term, India must reconsider its crude procurement and refining flexibility strategy, including improving processing capacity for lighter, sweeter grades and expanding strategic partnerships beyond sanctioned actors, he said. End

US$1 = INR 87.54

Edited by Ashish Shirke

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