Russian shipments of crude oil to India, that have rebounded in March after falling in February due to the US sanctions, are expected to slow down further if the US imposes tariffs on countries buying Russian oil.
Furthermore, India’s import bill could rise significantly if Russian oil does come under tariffs as the country will lose its access to discounted barrels.
“Suppose Russian crude is priced out due to tariffs or tighter compliance risks, we anticipate a gradual but steady reallocation towards WTI, Brazilian pre-salt barrels, and a resurgence in West Asian term flows,” said Sumit Ritolia, lead research analyst, refining & modeling at Kpler.
He highlighted that if secondary tariffs are imposed and actuality is coming hard on Russian crude, India’s oil import bill could rise significantly, potentially by $3-6/bbl per replacement barrel, depending on origin. “This would impact refiner margins, retail fuel pricing unless mitigated via new term contracts or discounts,” he said.
Even with longer haul and shadow fleet reliance, Russian barrels remain $3-8/bbl cheaper than West Asian or US grades on a landed-cost basis. If tariffs are levied on Russian oil, India is highly likely to experience a rise in its overall oil import costs.
“The discounted Russian barrels have played a crucial role in managing India’s energy expenditure. Replacing this significant volume with potentially more expensive alternatives from West Asia or the US will inevitably lead to an increase in the country’s import bill, with potential ramifications for inflation and the broader economy,” said Simarjeet Singh, assistant professor, finance & accounting, Great Lakes Institute of Management.
Indian refiners continue to pick a significant volume of Russian crude, owing to its relative economics as compared to other crude oil grades. India imports around 35% of its crude oil from Russia, and a major tariff action tied to US tariff would mean a scramble to replace this massive oil flow.
“A tariff action prompted flow rejig could therefore mean buying of more traditional origin crude grades for Indian refiners,” said Pulkit Agarwal, head of India content (cross commodities) S&P Global Commodity Insights.
With Venezuelan crude already under US tariffs and Russian flows potentially facing similar restrictions, Indian refiners are likely to diversify oil supplies further primarily from the US, Brazil, West Africa, and West Asia.
The country has already been seeing a sharp rise in volumes from the US touching 289,000 barrels per day in March, up from 113,000 bpd last year, according to data from Kpler, global real-time data and analytics provider. “WTI and Mars blends are attractive for Indian complex refiners and offer stable arbitrage windows from the US Gulf Coast,” Ritolia said.
India has also been gradually increasing its intake of Brazilian grades like Tupi and Búzios which are cost-competitive and suit Indian refining slates.
“Angola and Nigeria continue to offer medium-to-heavy crudes, though freight and supply consistency may limit upside,” Ritolia said, adding Iraq, UAE, and Saudi Arabia may regain some share through term contracts and geographic proximity, though Saudi barrels often command a premium and may rank as a secondary or tertiary choice.
India’s crude oil imports in March 2025 reached approximately 5.3 million barrels per day — the highest monthly volume on record, according to Kpler’s data. Russia remained the top supplier, accounting for around 1.88 Mbd, followed by Iraq at 0.9 Mbd, Saudi Arabia at 0.56 Mbd, UAE at 0.43 Mbd, and the US at 0.29 Mbd.
“Russia’s share increased in both absolute and relative terms, supported by attractive FOB pricing and higher export availability following domestic (Russia) refinery outages. In contrast, Iraq and Saudi Arabia lost share in March as Indian refiners shifted toward more cost-competitive barrels,” Ritolia said.
Even after the sanctions in January, Russian crude flows have remained resilient, averaging 1.68 Mbd in Q1 2025 owing to attractive discounts on Urals and other Russian grades and continued availability of non-sanctioned Russian-affiliated vessels.
Following recent drone attacks on Russian refineries, domestic crude processing in Russia fell to 5.2–5.3 Mbd (down from 5.5 Mbd in Jan), increasing export availability, according to Kpler. Urals FOB prices dropped to approx $55–58/bbl in March, well below the $60/bbl G7 price cap, enabling the use of Western logistics and insurance. “Indian refiners have capitalized on this arbitrage — buying more Russian barrels at discounted prices despite logistical complexity,” said Ritolia.
New US tariffs or secondary sanctions could disrupt this trend. Indian refiners may face higher freight and insurance costs, increased compliance and counterparty risks.
However, Ritolia noted that Indian refiners are likely to continue sourcing Russian crude opportunistically, especially if the price spreads remain wide and existing financial and shipping workarounds remain viable.
“India remains a core demand center for Russian oil amid Western disengagement. Price and refining economics outweigh geopolitical pressure — at least in the current framework. If secondary sanctions targeting buyers, traders, or insurers are not imposed, we can expect continued strong Russian crude flows to India, especially in a high-demand, high-margin environment,” he said.