In January 2025, the United States emerged as India's fifth-largest oil supplier, with imports surging to 218,400 barrels per day (bpd), a significant increase from 70,600 bpd in December 2024.

This rise in imports reflects India's strategic shift to diversify its energy sources amid ongoing geopolitical tensions and sanctions affecting Russian oil supplies.

Russia retained its position as the top oil supplier to India, with imports rising 4.3% to 1.58 million bpd during the same period.

India's imports of Russian oil are expected to decline in the coming months due to new U.S. sanctions targeting Russian oil suppliers and shipping vessels. These sanctions, which have significantly impacted global oil trade, require that Indian refiners only purchase Russian oil from companies and ships that are not sanctioned by the United States.

In January 2025, India imported approximately 1.58 million barrels per day (bpd) of Russian crude, a slight increase from December, but refiners are now facing challenges in securing future supplies due to the compliance requirements imposed by the U.S. The sanctions, which came into effect on January 10, 2025, specifically target major Russian oil producers and a fleet of tankers that have been instrumental in transporting oil to India.

The impact of these sanctions is expected to become more pronounced by March 2025 when existing contracts will need to be fulfilled under the new compliance rules. Indian Oil Corporation Limited has indicated that it may reduce its reliance on Russian crude if it cannot secure compliant shipments. Consequently, Indian refiners are likely to shift their focus towards other suppliers, including those from the Middle East and the United States, as they seek to diversify their sources amid rising uncertainties surrounding Russian oil supplies.

Overall, while India's imports from Russia surged significantly in previous months due to discounted prices, the recent sanctions are likely to curtail this trend and lead refiners to explore alternative sources for crude oil.

India's overall oil imports in January reached approximately 5.1 million bpd, with Middle Eastern oil accounting for about 53% of this total, marking a 27-month high. Iraq remained the second-largest supplier, followed by Saudi Arabia and the United Arab Emirates.

The Indian government aims to increase energy purchases from the U.S. to $25 billion this year, up from $15 billion last year.

Reuters