India’s Imports of Russian Oil Hit 10-Month High in May

New Delhi, June 3, 2025 – India’s crude oil imports from Russia surged to their highest level in 10 months in May, reflecting the country's continued appetite for discounted Russian barrels despite Western sanctions and increasing geopolitical risks. According to data from market intelligence firm Vortexa, Russia retained its position as India’s top oil supplier, contributing over 35% of total crude imports.

A Return to Russian Crude

India imported approximately 1.96 million barrels per day (bpd) of Russian crude in May 2025, marking the highest monthly volume since July 2024. The jump represents a 12% month-on-month increase and highlights India’s strategic approach to securing energy at cost-effective rates.

“Indian refiners are maximizing margins by sourcing cheaper Russian oil, especially Urals and Sokol blends, which are often priced at discounts compared to Middle Eastern grades,” said Sushant Gupta, Director of Asia-Pacific Refining at Wood Mackenzie.

The rise in imports coincides with a dip in arrivals from traditional suppliers like Iraq and Saudi Arabia, whose oil blends have recently become more expensive amid tighter OPEC+ output restrictions.

Why Russian Oil Remains Attractive

Despite pressure from Western countries and G7-imposed price caps on Russian crude, India has maintained strong energy ties with Moscow. The favorable pricing structure, supported by non-dollar transactions and shadow fleet logistics, makes Russian oil an economical choice for Indian refiners.

According to Rystad Energy, Russian Urals traded at an average of $69 per barrel in May — nearly $8-10 cheaper than similar grades from the Middle East. For Indian oil marketing companies (OMCs), this translates to significant savings.

“India’s demand outlook remains bullish, and with rising consumption, securing affordable supplies is a key priority,” said Ananya Mitra, senior analyst at Kpler. “Russian crude offers both price advantage and reliable volumes in the current market environment.”

Market Dynamics and Policy Nuances

India, the world’s third-largest oil importer and consumer, depends on overseas supplies for nearly 85% of its crude needs. With Brent crude hovering between $80 and $85 per barrel, any opportunity to lower import bills is critical for economic and fiscal stability.

The Indian government has so far resisted Western calls to limit Russian oil purchases, citing energy security as a sovereign matter. Moreover, Indian refiners have found ways to navigate sanctions through alternate shipping, insurance, and payment mechanisms.

In a recent interview, Union Petroleum Minister Hardeep Singh Puri stated, “India will continue to prioritize affordable energy. We are not bound by sanctions that are not mandated by the United Nations.”

Broader Geopolitical and Economic Implications

The rise in Russian oil imports comes at a time when geopolitical tensions are intensifying in the Black Sea and Middle East regions. As global shipping routes face disruptions, countries like India are seeking diversified, secure, and cost-effective energy sources.

Interestingly, the surge in imports also supports Russia’s energy export revenue amid declining European demand. With India and China absorbing the bulk of Moscow’s oil exports, Russia has managed to sustain its fiscal cushion despite sanctions.

Analysts believe that this evolving energy trade realignment will have long-term implications on global oil markets.

Outlook for Investors

For equity and commodity market investors, India’s increasing reliance on discounted Russian oil is a double-edged sword. On one hand, lower crude import costs benefit OMCs like Indian Oil Corporation (IOC), Bharat Petroleum (BPCL), and Hindustan Petroleum (HPCL), improving refining margins and profitability.

On the other hand, dependence on geopolitically volatile suppliers carries inherent risks. Any disruption in Russian supply chains or escalation in sanctions could pose downside risks to stock performance and macroeconomic stability.

“Investors should monitor refining spreads and crude sourcing strategies closely. Favorable oil procurement will likely reflect in quarterly results of refining majors,” said Nikhil Joshi, fund manager at Axis Mutual Fund.

From a macroeconomic lens, stable or lower import bills help the government maintain fiscal discipline and reduce the current account deficit — a positive signal for rupee strength and sovereign bonds.

Conclusion

India’s record-high Russian oil imports in May underscore a calculated strategy to balance energy affordability with global diplomatic pressures. While this trend enhances short-term economic resilience, the long-term reliance on geopolitically sensitive partners calls for careful risk management.

As the world continues to reshuffle energy alliances, India’s approach to sourcing crude oil will remain a crucial indicator for investors, policymakers, and global markets alike.