In a significant move reflecting India’s evolving energy strategy, two major state-owned refiners have secured 5 million barrels of crude oil through spot market tenders, marking a deliberate departure from their traditional reliance on Russian supplies. This development comes amid growing pressure from US sanctions targeting Russia’s energy sector and India’s broader commitment to diversifying its crude oil import basket.
The Breakdown
Hindustan Petroleum Corporation Limited (HPCL) has acquired 4 million barrels in total – 2 million barrels each of US West Texas Intermediate (WTI) crude and Abu Dhabi’s Murban crude – scheduled for January 2026 arrival. Meanwhile, Mangalore Refinery and Petrochemicals Limited (MRPL) has purchased 1 million barrels of Iraq’s Basra Medium crude, with delivery planned between January 1-7, 2026.[1]
While the identities of sellers and specific pricing details remain undisclosed, trade sources confirm that these acquisitions represent a strategic response to evolving geopolitical dynamics in global energy markets. The purchases underscore India’s proactive approach to maintaining energy security while navigating complex international relations.
Reason Behind the Shift
The timing of these purchases is directly linked to recent US sanctions imposed on Russia’s two largest oil companies, Rosneft and Lukoil, announced in October 2025. These sanctions, which take full effect on November 21, 2025, have prompted Indian refiners to reassess their supply chains and seek alternatives to avoid potential secondary sanctions from Washington.
According to maritime intelligence firm Kpler, Rosneft and Lukoil together supply approximately 60% of India’s Russian crude intake. With these entities now sanctioned, Indian refiners face a critical juncture: continue purchasing from sanctioned suppliers at considerable risk, or pivot toward alternative sources from the Middle East, America, and Africa.[2]
Both HPCL and MRPL have adopted the latter approach. MRPL had already paused purchases of Russian oil last month citing associated risks, while HPCL has significantly reduced its Russian oil intake over recent months. This cautious stance reflects broader industry sentiment among Indian refiners, many of whom are prioritizing compliance with international sanctions to protect their access to global financial systems and trading networks.
India’s Crude Import Landscape
To understand the significance of this shift, it’s essential to examine India’s current energy profile. As the world’s third-largest oil consumer, India imports over 85% of its crude oil requirements, totaling approximately 4.7-5 million barrels per day in 2025.
Russia emerged as India’s largest crude supplier following Moscow’s invasion of Ukraine in 2022, accounting for approximately 33-35% of India’s total oil imports in 2025 – a dramatic increase from less than 2% in 2021. This surge was driven primarily by steep discounts on Russian Urals crude and India’s refining infrastructure being well-suited to process these heavier grades.
However, this heavy reliance on Russian supplies has created vulnerabilities. In October 2025, India imported a record 568,000 barrels per day from the United States, the highest since March 2021, representing about 12% of total imports. This uptick was facilitated by favorable Brent-WTI price spreads and reduced demand from China, making American crude economically attractive on a delivered basis.[3]
The Road Ahead: Diversification and Challenges
Indian refiners are now actively pursuing a multi-regional sourcing strategy to offset reduced Russian flows. Industry analysts project that replacement volumes will likely comprise 60-70% from Middle Eastern suppliers (particularly Saudi Arabia, UAE, and Iraq), with the remaining 30-40% coming from the United States, West Africa, and Latin America.
This transition, however, comes at a cost. Analysts estimate that losing access to discounted Russian crude could add approximately USD 3-5 billion to India’s annual oil import bill, assuming a USD 5 per barrel premium on 1.6-1.8 million barrels per day. Additionally, alternative grades such as US WTI are lighter and yield less diesel – a disadvantage for India’s distillate-heavy demand profile.[4]
Strategic Implications
The recent purchases by HPCL and MRPL represent more than just routine procurement, they signal India’s commitment to balancing energy economics with geopolitical considerations. By diversifying away from Russian crude, India aims to:
1. Mitigate risks associated with potential secondary sanctions.
2. Strengthen energy ties with traditional Middle Eastern partners and emerging suppliers like the United States.
3. Maintain operational flexibility amid volatile global energy markets.
4. Demonstrate responsiveness to international pressure while preserving strategic autonomy.
As petroleum markets continue to evolve, India’s ability to navigate between affordability, supply security, and geopolitical alignment will remain critical. The government has already expanded crude sourcing from 27 countries in 2020 to over 40 countries today, reflecting this strategic diversification.[5]
Conclusion
The 5 million barrel purchase by HPCL and MRPL marks a pivotal moment in India’s energy procurement strategy. As November 21 approaches, the deadline for winding down transactions with sanctioned Russian entities, more such deals are expected. While Russian crude may continue flowing to India through intermediaries and complex trading structures, the era of direct, large-scale purchases from Rosneft and Lukoil appears to be ending.
For now, Indian refiners are hedging their bets, securing alternative supplies while monitoring how sanctions enforcement unfolds. This pragmatic approach exemplifies India’s broader foreign policy stance, maintaining strategic autonomy while adapting to changing global realities.
References
-
Economic Times. “HPCL, MRPL buy 5 million barrels US, Mideast oil, sources say.” November 2025.
-
The Hindu Business Line. “India’s record October crude oil imports from US may sustain in November 2025” November 6, 2025.
-
Oil Price. “India Races to Replace Russian Oil With U.S., Iraqi, and UAE Crude” November 9, 2025.
-
Think ING. “US sanctions on Russia cloud the outlook for the oil market.” November 5, 2025.
-
New Indian Express. “India’s oil imports: Soaring energy demand tied to geopolitics.” August 13, 2025.
Disclaimer: The information published in the above newsletter is collected from various sources in electronic medium and analyzed by the firm. The reader is advised to consult the attorney qualified in their jurisdiction, before acting on any information contained in this newsletter. India Juris excepts no liability what so ever in this regard.
