Indian state refiners pause Russian crude - price shift or Trump factor?

Indian state-run oil refiners have stopped buying Russian crude over the past week amid narrowing price discounts and renewed pressure from US President Donald Trump, according to industry sources cited by Reuters on Thursday.

India, the world's third-largest oil importer, has been the biggest buyer of seaborne Russian crude in recent months. But in the last week, four of India’s key state refiners - Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL), Hindustan Petroleum Corporation (HPCL), and Mangalore Refinery and Petrochemicals Ltd (MRPL) - have not placed any new orders for Russian oil, sources familiar with their procurement plans told Reuters.

The refiners, which usually buy Russian barrels on a delivered basis, are now turning to alternative supplies in the spot market. According to the report, they are seeking Middle Eastern grades such as Abu Dhabi’s Murban crude, as well as West African oil. 

While private refiners like Reliance Industries and Nayara Energy continue to import Russian oil, state-run refiners collectively account for over 60% of India’s refining capacity, which stands at 5.2 million barrels per day. 

The shift comes just weeks after Trump warned of trade penalties on countries continuing to buy Russian oil. On July 14, Trump said: "Countries that keep buying Russian oil will face 100% tariffs unless Moscow agrees to a major peace deal with Ukraine."

On Wednesday, Trump announced a 25% tariff on all goods imported from India starting August 1, plus a separate penalty for India's trade with Russia, including energy and military equipment. "I don't care what India does with Russia. They can take their dead economies down together, for all I care," Trump said. "India's tariffs are too high, among the highest in the world. All things not good! India will therefore be paying a tariff of 25 per cent, plus a penalty for the above, starting on August first."

India is the second-largest buyer of Russian crude after China, with Russian oil rising from 0.2% of India's total imports before the Ukraine war to 35–40% today.