India’s refiners are facing a sudden supply crisis following fresh US sanctions on Russia’s key crude exporters, Rosneft and Lukoil, which threaten to severely restrict oil flows to Asia’s third-largest economy.

The move, aimed at tightening pressure on Moscow, could disrupt an estimated 3.1 million barrels per day of global crude trade, of which nearly one million barrels were flowing into India.

The sanctions have forced Indian oil majors into emergency planning. Refiners are now looking to secure replacement cargos from West Asia, the United States, and Brazil, markets that come with substantially higher price tags and longer supply chains. This shift could strain refinery margins and exert upward pressure on domestic fuel prices.

Reliance Industries is particularly exposed to the sanctions, sourcing nearly half of its refining feedstock from discounted Russian grades such as Urals and ESPO. The company’s complex Jamnagar facility, designed to process a wide spectrum of crude, now faces the challenge of rebalancing its input mix without eroding profitability.

Nayara Energy, part-owned by Rosneft, stands in a more precarious position. It remains almost entirely dependent on Russian oil imports, and the sanctions could choke its supply lifeline. Industry analysts note that Nayara’s operational model will need urgent diversification to maintain throughput levels at its Vadinar refinery.

State-run refiners, including Indian Oil Corporation, Bharat Petroleum, and Hindustan Petroleum, are also caught in the crossfire. Beyond crude procurement issues, these companies have over $1 billion in trapped dividends and receivables linked to joint ventures and projects in sanctioned Russian territories, further complicating their balance sheets.

Energy market observers warn that Washington’s latest measures risk destabilising the global oil supply landscape. With nearly a million barrels per day of Russian crude previously diverted to India now potentially blocked, competition for Middle Eastern cargoes could intensify—raising import bills and possibly inflating India’s current account deficit in the near term.

Refiners are expected to seek temporary supply swaps and long-term contracts with Gulf producers to secure continuity. However, the loss of discounted Russian crude will likely alter India’s energy economics, eroding its cost advantage and heightening volatility in fuel prices during the coming quarters.

IDN (With Agency Inputs)