India Diversifies Crude Imports, Boosts African & South American Supply Amid Russian Oil Sanctions

Key Highlights:

1. Base Oil & Fuel Prices – Prices vary across grades and packaging, with N150 at ₹63.5/L (bulk) and ₹69.5/L (barrel), and Virgin 180cST Furnace Oil at ₹47.5-49/KG.
2. India’s Changing Crude Import Strategy – Russian crude imports dropped by 3%, while African and South American imports surged in February.
3. Geopolitical & Economic Impact – U.S. sanctions on Russia influenced India’s sourcing, but stable supply and price advantages remain a priority.
4. Expert Outlook – Market analysts predict India will maintain a flexible crude procurement strategy to balance cost efficiency and geopolitical risks.

Base Oil & Fuel Prices: Variability Across Grades and Packaging

• Base oil prices vary depending on grade and packaging, with bulk-packed options such as N150 at ₹63.5/L, SN150 at ₹61.5/L, and N500 at ₹96.5/KG, while barrel-packed prices are generally higher, with N150 at ₹69.5/L and SN500 at ₹90/KG. 
• Fuel oil prices include Virgin 180cST Furnace Oil at ₹47.5-49/KG and Low Sulphur Heavy Stock (LSHS) at ₹56.5/KG. Rubber Processing Oil prices vary between ₹44.5/KG and ₹84/L, depending on the brand and type.
• Hydraulic Oil ranges from ₹87-100/L in barrels and buckets, while Rust Preventive Oil is priced between ₹122-149/L. Gear Oil prices differ based on grade and packaging, ranging from ₹115-134/L.

India’s Crude Import Shift: More from Africa & South America, Less from Russia

• India, the world’s third-largest crude oil importer, adjusted its procurement strategy in February, increasing imports from Africa and South America while slightly reducing its intake of Russian crude. 
• This shift follows the U.S. sanctions imposed in early January, which targeted Russian oil traders and shipping networks, limiting the availability of non-sanctioned tankers for trade.
• As a result, Indian refiners sought alternative sources to ensure stable supply while maintaining compliance with sanctions. February saw African crude imports more than double to 330,000 barrels per day (bpd), up from 143,000 bpd in January.
• Similarly, imports from South America surged by 60% to 453,600 bpd. Meanwhile, Russian crude imports fell by 3% to 1.54 million bpd, marking the lowest share of total Indian crude purchases (30.5%) in a year.
• This diversification underscores India’s strategic balancing act—securing cost-effective crude while mitigating geopolitical risks. However, with Russian crude remaining a key part of India’s supply mix, refiners continue to navigate complex compliance requirements, ensuring purchases stay within the $60 per barrel price cap and avoiding transactions involving sanctioned entities.

Market News: Sanctions, Diversification, and Economic Impact

• India's crude oil imports dropped by 10.6% in December due to lower supplies from Russia, Saudi Arabia, and Kuwait.
• India has been diversifying its crude oil imports, sourcing more from Africa and South America to ensure supply security and navigate trade disruptions caused by geopolitical tensions and U.S. sanctions.
• Falling crude oil prices could help reduce India's forex outflow, lower the fiscal deficit, and ease inflationary pressures, providing economic relief.
• India reduced crude oil imports from Saudi Arabia and Russia in February while increasing purchases from Africa and Latin America to offset the impact of sanctions and maintain a steady supply.
• The Oilfields (Regulation and Development) Amendment Bill 2024 expands the definition of mineral oils to include hydrocarbons such as crude oil and natural gas, impacting India’s energy sector.
• Despite a drop in international crude oil prices, fuel prices in India have not decreased, allowing oil companies to maintain high-profit margins.
• Indian crude oil traders have adjusted their March shipments from Russia to comply with U.S. sanctions and capitalize on market uncertainties.

Expert Insights: India’s Strategic Balancing in Crude Procurement

Industry analysts view India’s diversification as a calculated move to sustain supply security amid geopolitical uncertainties. While Russian oil remains attractive due to price advantages, the evolving sanctions landscape pushes refiners to broaden their supplier base. Market experts expect India to maintain this flexible sourcing strategy, ensuring stability in its refining sector.