India’s state-owned refiners have resumed Russian crude purchases for September delivery, prioritising commercial benefits over mounting diplomatic pressure from Washington.
Indian Oil Corporation and Bharat Petroleum Corporation secured Russian Urals crude at $3-per-barrel discounts for September and October shipments. The companies had paused purchases in July when price differentials narrowed but recommenced buying as commercial terms improved.
The procurement restart occurs despite US President Donald Trump’s 25% additional tariff on Indian goods, imposed August 27 to penalise India’s continued energy trade with Russia. The levy specifically targets Delhi’s Russian oil imports, which have provided India with $12.6 billion in savings over 39 months.
IOC has expanded its Russian crude portfolio beyond traditional Urals grade to include Varandey and Siberian Light varieties. “We will continue to buy Russian oil depending on economics,” an IOC official confirmed, underlining the commercial focus driving procurement decisions.
Strategic Diversification
The expanded purchasing reflects improved market conditions as China’s increased Russian oil imports have stabilised Moscow’s crude pricing. This pricing stability has encouraged Indian refiners to commit to larger volumes despite geopolitical tensions.
Oil and Natural Gas Corporation has confirmed its subsidiaries HPCL and MRPL will maintain Russian crude purchases. Chairman Arun Kumar Singh acknowledged that US tariff threats create “significant instability” but emphasised no formal sanctions prohibit such transactions.
The state refiners’ strategy contrasts sharply with private sector challenges. Nayara Energy has cut refinery operations to 70-80% capacity after Saudi Aramco and Iraq’s state oil company SOMO suspended crude supplies following European Union sanctions targeting the Russian-backed facility.
Commercial Calculations
India’s approach reflects a calculated trade-off between energy security and diplomatic alignment. The country has maintained fuel price stability through discounted Russian imports while Western nations face supply constraints and elevated energy costs.
However, the sustainability of current procurement patterns faces increasing pressure. The US tariff specifically targets India’s Russian energy trade and could extend penalties to manufacturing and IT services exports worth billions annually.
State refiners continue prioritising cost advantages over diplomatic considerations, with procurement decisions driven by commercial viability rather than geopolitical alignment. This pragmatic approach has underpinned India’s energy security strategy but may prove increasingly difficult to maintain as sanctions regimes expand.
The divergence between Indian and Western energy strategies highlights the complex calculations facing emerging economies seeking affordable energy amid intensifying international tensions