Indian Refiners Broaden Oil Hunt as Russian Crude Flows Tighten

Indian refiners are expanding their search for crude oil beyond Russia as Ukrainian attacks disrupt Russian production and export routes, prompting processors to secure alternative supplies ahead of an expected increase in domestic fuel demand.

Russia has been India’s largest crude supplier since the Russia-Ukraine war began in 2022, with Russian barrels accounting for more than half of India’s crude imports last month. However, repeated Ukrainian attacks on Russian refineries and Black Sea ports have disrupted oil flows, created fuel shortages within Russia, and reduced the amount of crude available for export.

In response, Indian refiners are increasingly turning to suppliers in West Africa and the Americas. Persian Gulf producers are also being approached, despite continued concerns over restricted shipping activity through the Strait of Hormuz amid the ongoing US-Iran conflict. The diversification reflects growing efforts among Indian processors to protect crude availability and reduce exposure to disruptions affecting Russian supplies.

The timing of the shift is significant because Indian fuel demand is expected to strengthen as several refineries complete scheduled maintenance. Once these facilities return to normal operations, refiners are likely to increase crude processing rates and production, creating additional demand for feedstock.

Indian Oil Corp., the country’s largest refiner, has already issued tenders seeking crude from distant markets, including the Americas. The company also floated another tender focused primarily on Persian Gulf grades. Hindustan Petroleum Corp. and Mangalore Refinery & Petrochemicals Ltd. have similarly made purchases of non-Russian crude, highlighting the broader industry response.

Meanwhile, Russian crude exports have weakened. Overseas shipments averaged around 3.5 million barrels per day over the past four weeks, down from more than 4 million barrels per day in July. Ukrainian strikes have affected Russia’s ability to process crude domestically and redirect surplus barrels toward international markets.

The tightening supply environment is also increasing competition between India and China for Russian crude. October-loading Sokol cargoes from eastern Russia were purchased earlier than usual, indicating stronger forward demand and heightened competition for available grades.

Although Russian crude flows to India are expected to recover above 2 million barrels per day in the coming months, recent disruptions are encouraging refiners to diversify their sourcing strategies. Increased competition for alternative crude, higher freight exposure, and geopolitical risks could influence refinery margins and regional petroleum markets.

Impact on Products and Chemical Commodity Prices

The immediate impact is likely to be supportive for crude oil and refinery-linked chemical feedstocks, as Indian refiners compete for alternative barrels from West Africa, the Americas, and the Persian Gulf. Higher crude procurement costs and freight premiums could raise production costs for products such as naphtha, aromatics, olefins, and other petrochemical feedstocks. If Russian supply disruptions persist, tighter regional availability may push prices higher, particularly for naphtha and crude-linked chemicals. However, increased refinery operating rates after maintenance could improve product availability and partially offset upward pressure. Chemanalyst-tracked commodities linked closely to crude and refinery feedstocks may therefore experience moderate bullish pressure in the near term.