Reliance Shuns Russian Oil as PSU Refiners Step In; India Tilts Back to Middle East

Reliance Industries Ltd (RIL), once India’s largest buyer of discounted Russian crude, has not imported any Russian oil so far in January, even as state-run refiners stepped up purchases amid deep price discounts of USD 7 per barrel and shifting supply patterns. This marks a notable change in India’s crude buying trends amid tightening Western sanctions and compliance concerns.

In late 2025, Reliance had been one of the world’s biggest buyers of seaborne Russian crude at around 6,00,000 barrels per day, but data and industry sources show that the company did not lift a single Russian barrel in the first three weeks of January. Meanwhile, state-owned refiners have increased their intake, taking advantage of deep discounts. The question is why?

Shifts in Buying Patterns: Public vs Private Sector

RIL is not alone. HPCL-Mittal Energy Ltd, a joint venture between Hindustan Petroleum Corporation Ltd (HPCL) and the London-based Mittal Group, led by steel magnate Lakshmi Mittal, namely Mangalore Refinery and Petrochemicals Ltd, did not purchase any Russian oil cargoes in January, according to the data cited in the report.

On the contrary, state-owned Bharat Petroleum Corporation Ltd (BPCL) raised its purchases to 164,000 bpd in January, compared with 1,43,000 bpd in December.

Data from maritime intelligence firm Kpler showed that state-run Indian Oil Corporation (IOC) bought an average of 4,70,000 barrels per day (bpd) of Russian crude in January, its highest-ever monthly intake, up from about 4,27,000 bpd in December 2025.

Nayara Energy, backed by Russian oil major Rosneft and traditionally more exposed to Russian barrels, continued to source significant volumes averaging around 4,69,000 bpd in January. Collectively, these state-run and linked entities accounted for close to 60% of India’s Russian oil imports in the month.

Despite these increases, total Indian imports of Russian crude dipped slightly to about 1.1 million bpd in the first three weeks of January, down from roughly 1.2 million bpd in December 2025. Both figures remain significantly below the 1.84 million bpd imported in November 2025, reflecting the impact of tightened sanctions and the compliance risk on overall flows.

Sanctions, Compliance and Supply Channels

The change in pattern of Russian shipments increasingly reflects the use of non-sanctioned intermediaries and trading entities rather than direct liftings from major Russian exporters. Rosneft and Lukoil, Russia’s two largest oil producers, are now subject to US sanctions that took effect on 21 November 2025, pressuring many buyers to rethink direct contracts.

Close to 1,30,000 bpd of Russian crude was supplied to India by Rosneft in January, with 103,000 bpd from Lukoil, while other suppliers, such as Surgutneftegas and RusExport, delivered the bulk of the volumes. This shift in supply sources points to changing trade routes as refiners manage sanctions, pricing and compliance.

A Reliance spokesperson confirmed that the company had not received any Russian cargo in January and noted that Reliance’s purchases in December were about half of those in November. Several refineries that typically sourced Russian crude have paused direct purchases because of concerns about sanctions exposure and global compliance risks.

What Do Volume Trends and Changing Market Patterns Say?

Although Indian imports from Russia have declined year-to-date, Kpler analyst Sumit Ritolia states that the overall Russian crude deliveries to India will remain at moderate levels, with average imports projected at around 1.2 million bpd in January and 1.3–1.5 million bpd for the first quarter of 2026.

While direct deliveries linked to Rosneft and Lukoil are still taking place, these flows are increasingly concentrated with Nayara, given its different risk posture and Russian ownership.

“Nayara remains structurally more exposed to Russian crude than most Indian peers, as its sanctioned status has reduced access to alternative feedstocks and reinforced reliance on Russian barrels through established supply-chain linkages,” said Ritolia.

The refinery, backed by Rosneft, accounted for a significant share of India’s Russian crude intake. Nayara has continued operating at around 90–100% capacity, indicating stable sourcing and sustained refinery runs. On the products side, Nayara has been moving large volumes of refined fuel domestically through multiple channels, while some shipments by sea into a broader set of overseas markets have also been observed.

Other Indian refiners, including public sector firms, are increasingly routing purchases through non-sanctioned trading entities that have emerged over the past two to three months to keep Russian crude flows moving in a more compliance-friendly structure.

The shifting trend, where public-sector refiners are taking on more, and Reliance remains on the fringe, highlights the balancing act of securing discounted crude feedstock and the compliance risks posed by sanctions among major Indian energy participants.

Key Takeaway for Investors

The differences in sourcing Russian crude between Reliance and state-owned refiners highlight the risk management and compliance priorities of India's largest energy operators. The absence of Reliance could demonstrate prudence on US sanctions and tariff risk, even at the cost of giving up fully discounted barrels.

Meanwhile, rising purchases by public-sector firms imply that discounted Russian crude remains economically viable for refiners open to intermediated channels. This change can be seen by investors as an indicator of a shift in risk appetite and supply policies in the Indian oil industry and may affect refining margins, crude cost structure, and positioning in global trade in the short term.

Source:

Economic Times

Energy World