Petrol-Diesel Prices: For nearly three years, Indian oil companies have relied on discounted Russian oil to stabilize fuel prices through lower input costs. Now, the landscape is rapidly changing as new US sanctions begin to take effect. That change is already impacting domestic refinery operating costs and will impact refining rates, import bills, and buying policies.
India imports about 86% of its crude oil requirements. Since mid-2022 Russian was India’s largest oil supplier which provided nearly one-third of India’s total imports. At its peak India imported about 1.75 million barrels of Russian oil per day, mostly from Rosneft and Lukoil.
Russian Oil Discounts Shrink, Fuel Price Pressure on India
The big advantage of Russian oil earlier was the $8–12 discount per barrel compared to Middle Eastern oil and an easy payment system managed through intermediaries. But now, that discount has almost halved.
The recent US sanctions have directly hit shipping, insurance, and trading networks used by Indian refiners to import Russian oil. Banks are now more cautious during payment settlements. As a result, transaction risks have increased, discounts have dropped, and depending too much on Russian oil is no longer profitable.
Impact of US Sanctions on Oil Imports
The new sanctions on Rosneft and Lukoil have created uncertainty in the global oil supply chain. Prices are becoming unstable. Russia’s share of India’s oil imports has dropped from 36% to around 34% this year. The cost of imports has also increased by about $5 per barrel compared to the Dubai-linked average.
India’s oil imports from the United States reached about 575,000 barrels per day in October — the highest since 2022 — showing a shift in strategy. Crude processing in India fell to a 19-month low in September. Although officially blamed on maintenance, refinery officials say the loss of cheap Russian oil has made operations harder.
India’s Refiners Change Strategy
Reliance Industries has stopped buying oil linked to Rosneft and is now sourcing from spot markets. Indian Oil has paused new Russian contracts. Bharat Petroleum and Mangalore Refinery are increasing oil purchases from the US and Gulf countries.
With sanctions pushing prices higher, fears of supply shortages and inflation are growing. This could raise India’s import bill and fiscal deficit.
To stay connected to global trade and banking systems, India is adjusting its oil policy. This silence from New Delhi is not political—it reflects a strategic shift.
What Lies Ahead for Consumers
For now, fuel prices at the pump remain unchanged. But state-run oil companies cannot bear losses for long. If conditions allow, fuel prices may rise unless global oil prices drop again.
The Russian oil discount was a short-term opportunity for India. That phase is ending. Experts believe India must now diversify oil sources, boost domestic output, and use its strategic oil reserves wisely.
Refineries are already changing how they buy and process crude. The next move—whether in fuel prices or government support—will directly affect consumers.