Industry Odisha Bureau, Sep 22: Indian refiners face a critical November buying cycle. New US legislation raises tariff risks, pushing processors to reconsider their heavy reliance on Russian crude.
India’s refiners are approaching a pivotal procurement window. November delivery negotiations loom, and this time uncertainty runs deeper. New US legislation has introduced fresh tariff risks tied to Russian crude purchases. Refiners are already scanning the market for alternatives.
US Tariffs Complicate Russian Oil Purchases
The new law empowers Washington to act. Signed last week, it allows tariffs on countries buying Russian energy. India sits among the major buyers potentially exposed. This isn’t a confirmed measure yet. It’s tariff authority, not an announced action. Rates could reach 100 percent, the legislation states. Implementation could follow within 30 days.
Russian Crude Remains Important for India
Russia’s role in India’s energy mix has been substantial. Some recent months saw Russian oil exceed half of total imports. September estimates suggest imports averaging 1.9 million barrels daily. That would represent over 35% of India’s total imports, according to Kpler. This could mark the lowest Russian share since April.
People involved in discussions say India may temporarily limit Russian imports. A range of 20% to 30% has been mentioned. This isn’t official government policy, sources caution. It reflects informal thinking among people close to the talks.
Alternative Crude Could Carry Higher Costs
Replacing Russian volumes won’t be straightforward. The scale dwarfs alternatives like Venezuela or Iran. Cost is another obstacle. Russian Urals delivered into India recently traded near $133 per barrel, according to Argus Media. Middle Eastern grades including Oman and Murban cost several dollars more.
Hormuz Disruptions Tighten India’s Options
Persian Gulf exporters continue struggling to restore full flows through the Strait of Hormuz. This has added pressure to already-tight global crude markets. India’s own requirements are climbing too. A new refinery in Rajasthan, alongside expansions elsewhere, could push purchases toward 5.4 million barrels daily.
November Buying Cycle Becomes Critical
Russian crude negotiations for November deliveries typically begin in this month’s final week. That timing places the next buying decision squarely within this uncertainty. Refiners must weigh three factors simultaneously tariff exposure, replacement costs and crude availability. India will also watch whether Washington applies similar pressure to other major buyers, including China.
Energy Security Remains Central
India has adjusted its Russian purchases before, as US pressure has shifted over time. Officials maintain that affordability drives procurement decisions, given the scale of demand across a population of roughly 1.4 billion people.
Ajay Srivastava, founder of the Global Trade Research Initiative, argued India should keep buying Russian crude while it remains competitively priced. He suggested tariff threats alone shouldn’t dictate procurement strategy.
For now, the path forward stays unsettled. India’s refiners must balance commercial logic, energy security and shifting trade politics with no clear signal yet on how the coming weeks will unfold.
