India is set to gradually pare back its crude oil purchases from Russia following an understanding reached with the United States that helped ease trade tensions between the two countries. While the shift marks a significant policy signal, the transition is expected to be measured rather than abrupt, given the operational realities of India’s refining sector.

The move comes after US President Donald Trump signed an executive order on Friday rescinding a punitive 25 per cent duty on all imports from India, citing New Delhi’s commitment to stop importing Russian oil. However, people familiar with the matter said Indian refiners have not received any formal written directive to immediately halt Russian purchases and are instead being nudged to slowly reduce future orders.

Reliance Industries recently bought 2 million barrels of Venezuelan oil from trader Vitol, Reuters reported. This is Reliance Industries’ first purchase from the South American nation in nearly a year.

Refiners told to slow new Russian oil orders
According to PTI, Indian refiners have been informally advised to stop placing fresh orders for Russian crude while continuing to honour existing purchase commitments. These contracts are typically finalised six to eight weeks in advance, meaning Russian oil will continue to flow into India for the time being.

Some public-sector refiners had already moved away from Russian oil following earlier US sanctions. Hindustan Petroleum Corporation Ltd (HPCL), Mangalore Refinery and Petrochemicals Ltd (MRPL), and HPCL-Mittal Energy Ltd (HMEL) stopped buying Russian crude soon after Washington sanctioned key Russian exporters last year. Others, including Indian Oil Corporation (IOC) and Bharat Petroleum Corporation Ltd (BPCL), are now expected to wind down their exposure in a phased manner.

Reliance Industries Ltd, India’s largest buyer of Russian oil, had paused purchases late last year after sanctions were imposed on Rosneft and Lukoil. According to PTI, Sources said it is likely to fully cease buying Russian crude again once a resumed cargo of 1,50,000 barrels is delivered in the coming weeks.

Despite these developments, officials at the Oil Ministry have declined to comment, while the Commerce Ministry and the Ministry of External Affairs have not publicly addressed the commitments made regarding Russian oil.

Nayara Energy remains an exception
One notable outlier in this transition is Nayara Energy, which is partly owned by Russia’s Rosneft. Nayara has been sanctioned by the European Union and the UK, making it difficult for the company to source crude from most global suppliers. As a result, it is effectively forced to continue buying Russian oil from non-sanctioned entities.

Sources told PTI that Nayara’s situation was explained to US trade officials during discussions in December, and the company may need to be granted an exemption or special dispensation under any broader “no Russian oil” policy.

India’s imports of Russian crude had already been declining even before the latest understanding with Washington. Shipments averaged about 1.2 million barrels per day in December 2025, down from a peak of around 2.1 million barrels per day in May 2023. Volumes fell further to roughly 1.1 million barrels per day in January and are expected to dip below 1 million barrels per day in the coming months. With the new agreement in place, sources told PTI that imports could eventually be cut by nearly half.

Analysts, however, caution that a sharp near-term drop is unlikely. According to Sumit Ritolia, Lead Research Analyst, Refining and Modeling at Kpler, the impact will be gradual.

“Russian volumes remain largely locked in for the next 8-10 weeks and continue to be economically critical for India’s complex refining system, supported by deep discounts on Urals relative to Brent. Imports are expected to stay broadly stable in the 1.1-1.3 million barrels a day range through Q1 and early Q2,” he said, according to PTI.

“Despite a recent moderation in purchases, India is unlikely to fully disengage in the near term.”

Prashant Vasisht of Icra said the India-US trade deal could also open up alternative sourcing options. “For the Indian refining sector, there are ample avenues, including the US, to purchase crude as Russian crude accounted for less than 2 per cent of Indian crude imports prior to FY2023.” He added that replacing Russian oil with market-priced crude would raise India’s import bill by less than 2 per cent, while Venezuelan heavy and sour crudes could emerge as another cost-effective option.

For now, India appears to be walking a careful line—balancing geopolitical commitments with energy security—signalling change without risking disruption to its fuel supply.
Source: FE Business