Indian refiners lean on Russia, UAE, South America for August crude oil imports
Indian refiners continued sourcing a large share of August crude oil purchases from Russia, alongside the UAE and South American suppliers, even as a new US sanctions bill threatens secondary tariffs on major buyers of Russian oil
Russia has remained India's single largest crude oil supplier through much of 2026, despite fluctuations in market share driven by sanctions pressure and price dynamics
The US Senate passed the Lindsey O. Graham Russia (and Iran) Sanctions Act in 2026, which authorises secondary tariffs of up to 100% on the top purchasers of Russian oil and gas, naming India among the countries at risk
Indian refiners are diversifying import sources toward the Gulf (UAE) and South America (including Brazil and Guyana) as a hedge against potential disruption to Russian supply
India's crude oil import dependency and diversification strategy
India imports roughly 85-88% of its crude oil requirement, making energy security and import diversification a central strategic and economic policy concern managed jointly by the Ministry of Petroleum and Natural Gas and the Ministry of External Affairs.
Key Details
- Before 2022, Iraq and Saudi Arabia were traditionally India's largest crude suppliers; Russia's share was under 2% before the Russia-Ukraine war
- Following Western sanctions on Russian seaborne crude after February 2022, discounted Russian Urals crude became commercially attractive, pushing Russia's share of India's crude imports to as high as ~40-48% at points in 2023-2026
- India's stated position has been that energy purchases are guided by "national interest" and market factors, and are not in violation of any UN Security Council sanctions (Western sanctions on Russia are unilateral, not UN-mandated)
- Diversification toward UAE, US, and Latin American suppliers (Brazil, Guyana, Colombia) is a hedging strategy against both price volatility and secondary-sanctions risk
The continued reliance on Russian crude alongside growing UAE and South American purchases illustrates India balancing discounted energy costs against the geopolitical risk of US secondary sanctions.
The Graham Act and secondary sanctions/tariffs
The Lindsey O. Graham Sanctioning Russia and Iran Act of 2026, passed by the US Senate in 2026, authorises the US President to impose secondary tariffs of up to 100% on the top purchasers of Russian oil, gas, uranium, or petroleum products, and on countries facilitating sanctions evasion.
Key Details
- The bill passed the US Senate with a bipartisan 86-11 vote and awaited House consideration as of August 2026
- It targets the top five importers of Russian oil/gas — reported to include China, India, Slovakia, Hungary and Azerbaijan
- China and India together are estimated to account for roughly 70% of Russia's energy export revenue, making them the primary intended pressure points
- "Secondary sanctions/tariffs" differ from primary sanctions: rather than directly barring Russian trade, they penalise third countries (like India) that continue to transact with the sanctioned party, extending the sanctions regime's reach extraterritorially
- This is separate from, but connected to, existing US tariff measures on Indian goods exports announced earlier in 2026 partly linked to India's Russian oil purchases
Indian refiners' continued Russian oil purchases occur against the backdrop of this pending legislation, which — if enacted and enforced — could subject Indian exports to the US to steep additional tariffs, making import diversification toward the UAE and South America a risk-mitigation measure.
Strategic Petroleum Reserves and energy security architecture
India maintains underground strategic crude oil reserves as a buffer against supply disruptions, distinct from the operational/commercial stocks held by oil marketing companies.
Key Details
- India's Strategic Petroleum Reserves (Phase I), managed by Indian Strategic Petroleum Reserves Limited (ISPRL) under the Ministry of Petroleum and Natural Gas, are located at Visakhapatnam (Andhra Pradesh, 1.33 MMT), Mangalore (Karnataka, 1.5 MMT), and Padur (Karnataka, 2.5 MMT) — a total capacity of about 5.33 million metric tonnes
- Oil is stored in unlined underground rock caverns; total capacity provides for roughly 9-10 days of India's crude requirement
- Phase II expansion is planned at Chandikhol (Odisha) and Padur (Karnataka)
- India is not a member of the IEA (International Energy Agency) in full capacity terms but is an "Association Country," and separately coordinates with OPEC+ producers bilaterally given its import dependence
Diversifying the import basket (Russia, UAE, South America) complements the strategic reserve buffer as a second layer of India's energy security policy against geopolitical supply-chain shocks such as sanctions-driven disruptions.
- India imports approximately 85-88% of its crude oil requirement
- Russia's share of India's crude imports has ranged roughly between 25% and 48.6% at various points through 2026, depending on sanctions and pricing pressure
- The Graham Act (2026) authorises secondary tariffs of up to 100% on top Russian oil/gas purchasers; passed the US Senate 86-11
- China and India are estimated to account for around 70% of Russia's energy export revenue combined
- India's Strategic Petroleum Reserve (Phase I) capacity: 5.33 MMT across Visakhapatnam, Mangalore, and Padur, providing about 9-10 days of cover
- Pre-2022 baseline: Russia's share of India's crude imports was under 2%; Iraq and Saudi Arabia were traditionally the top two suppliers