
India’s state-owned refiners, Indian Oil Corporation, as well as Bharat Petroleum Corporation Limited, have walked back into the Russian oil market commencing oil imports for Sept/October. Rayback from not much earlier when IOC and BPCL paused purchases in July due to diminishing discounts, and political pressure from Washington. This dynamic reinforces the world’s primary ways of impact how India’s oil sourcing decision making gets weighed: price, geopolitics, energy security.
The Indian refiners being reinstated to the Russian market also has potential implications for global flows, mostly because China has become a more aggressive purchaser of crude from Russia while India was gone, while it appears discounts are widening again after tightening up. Russian crude oil was again looking attractive enough for Indian refiners, who anyhow were just looking for energy security at a reasonable price irrespective of global pricing sentiment.
Why Indian Refiners Stopped Purchases in July
In July, both IOC and BPCL stopped buying Russian oil because discounts were shrinking and it was becoming less economic. Other considerations were growing criticism from Washington, which has repeatedly raised concerns about India’s reliance on Russian energy because it worked against sanctioning Russia.
Further complicating the picture was President Donald Trump threatening to levy an additional 25% tax on Indian goods from August 27, if New Delhi continued to be heavily dependent on Russian supplies. For a short time, this resulted in Indian refiners looking for other suppliers in the Middle East and Africa, albeit at higher cost.
Discounts on Russian Oil Make It Attractive Again
The primary reason for the resumption of purchases is the increasing discounts on Russian crude. According to company executives, flagship Urals crude is now about $3 per barrel cheaper than its alternatives, and this makes it a very compelling choice.
In addition to Urals, IOC has secured cargoes of other Russian grades including Varandey and Siberian Light. With these purchases, refiners can mix crude grades and maintain pricing. The economics of importing Russian oil, once again, trumped the political risks, reaffirming India’s strategy to balance diplomacy and energy security.
China Steps Up Purchases as India Returns
While India briefly stepped back from buying Russian oil, China filled the gap by ramping up purchases. Analysts reported that Chinese refineries secured at least 15 cargoes for October and November delivery. With Indian refiners returning to the market, competition between the two Asian giants for discounted Russian crude could intensify.
This dynamic could reshape the global energy trade, as India and China remain the largest consumers of Russian oil outside of Europe. The return of India as a buyer may limit the cargoes available for China, potentially altering pricing trends in the months ahead.
IOC’s Strategy Moving Forward
IOC, India’s biggest refiner said during a recent analyst call that it would continue to purchase Russian oil as long as it made economic sense. Company representatives highlighted that their purchasing decisions are based only on pricing and availability, not politics.
By buying cheap crude, IOC and BPCL can protect its margins while keeping domestic fuel prices more stable, which is increasingly important as energy demand is growing quickly in India. With increasing demand from transport, industry and households, maintaining cost effective supply to their customers is paramount for Indian refiners.
The Broader Impact on Global Energy Trade
India is news this week for announcing a resumption of its oil purchases from Russia. The decision exhibits how geopolitics mingle with the economics of energy trade. While western countries are calling for reductions in the use of Russian oil, India remains focused on affordable supply from all suppliers for its economic development.
Balancing reduced dependence on certain sources with energy security and climate change, while navigating global high-priced oil, forms part of a broader energy strategy in India – diversifying imports for energy security. While it will continue to be contradictory to geopolitical expectations, ultimately it remains potential central to India’s thinking about economic planning.
Final Thoughts
By resuming oil imports from Russia, India’s state refiners Indian Oil and BPCL are signalling to the world that economic factors will dominate India’s choices on energy. Indian oil refiners are once again making the economic gamble in favor of crude from Russia, however disturbing the current geopolitical thinking may be.
It also cements the potential for further competition for discounted supplies with China, and the state of geo-economics keeps global oil markets restless. It is also clear to India that cheaper energy is more powerful than diplomatic pressure – at least for the moment. As global demand remains strong and supply lines are re-established, India’s refiners will surely continue to keep crude from Russia within that mix as long as the economics allow them to.