New Delhi: Indian refiners are reviewing their contracts for importing Russian crude oil after the United States imposed sanctions on Russian energy majors Rosneft and Lukoil. The move, reported by Reuters on Thursday, has prompted Indian companies to reassess their dependence on Russian oil, which has been a crucial source of discounted crude since 2022.

Refiners begin contract review

According to sources familiar with the matter, major Indian refiners, including Reliance Industries, Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL), have initiated internal reviews of their long-term and spot purchase agreements. The step follows Washington’s decision to target Rosneft and Lukoil with new sanctions, limiting their access to international trade and finance systems.

One source said refiners were “studying every aspect of existing contracts” to ensure compliance with sanctions and avoid disruptions in payment settlements. While India has not formally joined Western sanctions on Russia, refiners remain cautious, particularly over banking channels that handle oil trade transactions.

Possible reduction in imports

India, which has emerged as the largest buyer of seaborne Russian crude since the Ukraine conflict, imported around 1.7 million barrels per day of Russian oil in the first nine months of 2025. However, refiners may now sharply cut these imports to avoid payment blockages and shipping delays.

Reliance Industries, one of the country’s biggest private refiners, is reportedly considering halting its 500,000 barrels per day import agreement with Rosneft. State-run companies are also verifying if any existing supplies can be linked directly to sanctioned entities.

“If banks refuse to process payments tied to these firms, the intake could drop to zero,” a refinery source told Reuters. This dependence on financial clearance systems means the eventual scale of reduction will depend on how strictly banks enforce the sanctions.

Alternative sourcing and cost impact

Industry experts suggest that refiners are exploring alternative supplies from the Middle East and Latin America, particularly from Saudi Arabia, the UAE, and Brazil. However, replacing Russian crude, which comes at a heavy discount, could raise procurement costs for Indian refiners.

Oil market analysts warn that a sharp decline in Russian imports may push up domestic fuel prices if refiners cannot absorb the higher crude costs. Some refiners may also need to adjust refining configurations, as certain plants were tuned to handle Russian grades.

Global and diplomatic implications

The review comes amid heightened geopolitical tension and ongoing trade discussions between India and the US. Washington has been urging New Delhi to reduce energy cooperation with Moscow, while offering trade incentives in return.

For Russia, losing India as a major buyer would deal a blow to its oil export revenue. It may be forced to offer deeper discounts to attract smaller buyers in Asia or Africa. Analysts note that India’s decision could shift global oil flows, benefiting Middle Eastern and American suppliers.

The road ahead

While an immediate halt in Russian crude imports appears unlikely, sources believe the coming months will see a significant drop in direct purchases from Rosneft and Lukoil. Refiners are expected to finalise new sourcing plans by the end of the year, depending on the banking sector’s stance and government guidance.

The development marks a turning point in India’s energy strategy since 2022, signalling a gradual move away from sanctioned Russian supplies.