Russian crude hard to replace: Refiners

Replacing Russian crude, which has made up 47% of India’s imports since the Iran war began, presents a significant challenge for local refiners in the current market, according to industry executives. Many key suppliers have already been cut off following recent US legislation. While it is unclear whether President Donald Trump will immediately impose the penalties, US ambassador to India Sergio Gor stated that the bill is being pushed by the Congress in a bipartisan manner, contrary to Trump's advocacy.

Indian refiners have been seeking imports from various sources, but the majority of their imports over the past six months have still come from the world's largest producers, with Russia, Saudi Arabia, and the UAE accounting for two-thirds of India’s crude imports during March-August. However, Saudi supplies were disrupted by drone attacks on a crucial pipeline recently.

If India and other buyers were to scramble for replacement barrels simultaneously, oil prices could surge sharply. Brent futures are currently around $105 a barrel, and finding vessels could also prove challenging due to record-high tanker freight rates. The choice now is starker as Gulf supplies have been disrupted since the conflict in West Asia began at the end of February.

India initially chose to bear the cost of the 25% tariff imposed on Russian oil in August 2025, but the situation is now more dire as Gulf supplies have been disrupted, and the global crude market has become more fragile due to Saudi supplies halting and the US blockade of Iranian exports. Any further curtailment of Russian supplies could lead to significant upward pressure on oil prices, especially as global inventories are already depleted and fuel prices are already at a record high.