An SBI Research report from August 8 said if India stopped oil imports from Russia during the rest of FY26, its fuel bill might increase by $9 billion in FY26 and $11.7 billion in FY27.
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A complete halt of Russian crude oil to India — a phenomenon viewed with skepticism — could cause a frantic scramble among refiners to arrange up to 2 million barrels per day (mb/d) and prepare for another shake-up in sourcing, blending, and exporting.
Although domestic refiners are quite skilled at navigating geopolitical upheavals, analysts, refiners, and officials fear that “no-Russian crude” would mean filling the gap with cargoes from West Asia, Latin America, West Africa, or even Canada.
This evolving scenario may stretch over the short to medium term and will inflate India’s crude oil import bill. The intensity of this inflation will depend on how much Russian oil enters the international market.
Kpler, a global real-time data and analytics provider, estimates India’s current Russian crude oil imports at around 1.7–2 mb/d —roughly 38 per cent of its total crude intake. Replacing this volume requires a multi-regional approach.
Official sources said domestic refiners have already started distancing themselves from contracting more Russian supplies. They are buying West Asian grades, while some additional shipments will come from Latin America. These are for delivery October 2025 onwards.
Replacing Russia?
Sumit Ritolia, Kpler’s Lead Research Analyst for Refining & Modeling, explained that Russian crude supports high distillate yields (producing more diesel and jet fuel) – ideally suited to India’s advanced refining infrastructure.
“It has enabled both State-owned and private refiners to operate above nameplate capacity while maintaining strong margins. A reversal of this will result in a mild yield shift and probably a small reduction in primary throughput rates, as margins will no longer command a sizeable premium against regional benchmarks, considering existing discounts on Russian oil,” he told businessline.
A balanced replacement strategy, Ritolia opined, may involve 60–70 per cent of substitute volumes from West Asia, with the US, African, and Latin American crudes serving as tactical fillers. Nevertheless, he noted that none match Russian barrels in cost, quality, or reliability.
However, this is easier said than done.
According to Ritolia, the most viable operational option to replace Russian crude oil is with grades like Basrah Medium, Upper Zakum, Arab Light, and Omani Export, which align well with Indian configurations.
“However, much of this supply is already locked in through long-term contracts, limiting flexibility,” Ritolia pointed out.
American grades such as WTI Midland could contribute 200,000–400,000 b/d. They are lighter and yield-less diesel, a disadvantage for India’s distillate-heavy (diesel) demand. Long-haul freight and cost considerations will also restrict scalability.
West African and Latin American crudes like Bonny Light, Forcados, Dalia, and Tupi offer moderate potential. However, Ritolia anticipated that pricing volatility and local consumption needs, especially in Nigeria post-Dangote Refinery, may limit availability.
Pricing power
Ritolia pointed out that should Russian oil become inaccessible, India could face an additional $3–5 billion in annual import costs. This calculation is based on a $5 per barrel premium on 1.8 mb/d.
“If global prices rise further (a scenario in which Russian crude exports are being curtailed, in the absence of sufficient buying interest from India), the financial burden could increase significantly,” he opined.
For comparison, ICRA’s Senior Co-Group Head of Corporate Ratings, Prashant Vasisht, last week said a $10 per barrel increase in crude prices adds $13-14 billion to the import bill. India spent more than $157 billion on crude oil purchases in FY25.
Additionally, an SBI Research report from August 8 said if India stopped oil imports from Russia during the rest of FY26, its fuel bill might increase by $9 billion in FY26 and $11.7 billion in FY27.
Ritolia was of the view that high prices may prompt the government to cap retail fuel prices, which could strain fiscal balances. A spike in the import bill could even lead to a reduction in overall crude purchases. India’s limited storage capacity further constrains its ability to manage such disruptions.
Published on August 10, 2025