Indian refiners pivot away from Russian oil, eye Middle East supplies amid U.S. trade deal push

Reuters reported the information.

India emerged as Russia's largest customer for discounted seaborne crude following the Kremlin's 2022 Ukraine invasion, but the arrangement sparked criticism from Western nations that imposed sanctions on Moscow's energy sector. Those nations argue that oil revenues help fund Russia's military operations. Now, as Middle East producers benefit from increased output quotas from the Organization of the Petroleum Exporting Countries and keep global markets well-supplied, Indian refiners are seizing the opportunity to diversify their supply chains.

Indian oil companies have started scaling back Russian crude purchases after government discussions aimed at accelerating a U.S.-India trade deal, according to three refining sources. The oil ministry's Petroleum Planning and Analysis Cell has begun collecting weekly data on refiners' purchases of Russian and American crude.

In a significant move, state-owned Bharat Petroleum Corp awarded one-year contracts to purchase Iraqi Basrah and Omani crude through trader Trafigura, and is seeking to buy Murban oil from the United Arab Emirates under a separate tender, according to sources who requested anonymity. Starting in April, Trafigura will supply four cargoes of Oman crude each quarter at 75 cents per barrel below Dubai quotes, plus one shipment of Basrah Medium at a 40-cent discount to the grade's official selling price, two traders said.

The shift comes as Washington, already working to narrow its trade deficit with India, doubled import tariffs on Indian goods to 50% last year in response to India's substantial Russian oil purchases.

Several major Indian refiners have already halted Russian oil purchases, including state-run Hindustan Petroleum, Mangalore Refinery and Petrochemicals, and private refiner HPCL-Mittal Energy Ltd. India's Russian oil imports dropped to their lowest level in two years last December, while OPEC's share of Indian imports reached an 11-month high, according to trade data.

Beyond the Middle East, Indian refiners have expanded purchases from Africa and South America. They have also increased procurement of U.S. oil to help replace Russian supplies and reduce the trade deficit with Washington, while exploring opportunities to source Venezuelan crude.