Tariffied, oil PSUs stop buying Russian crude in spot market
Following US tariffs and penalties on India's trade relationship with Russia, state-run refiners like IOCL, BPCL, HPCL, and MRPL have ceased spot market purchases of Russian crude oil. This shift will likely increase costs as refiners turn to Midd...
US President Donald Trump on Wednesday imposed a 25% tariff on Indian exports effective August 1, 2025. He coupled these tariffs with an "additional penalty" for India's strategic trade relationship with Moscow, especially its oil purchases and military imports.
India is the world's third-largest oil-importing and consuming nation, and IOCL, BPCL, HPCL, and MRPL procure nearly 40% of their crude oil requirement from the spot market. These refineries control 60% of India's refining capacity.
"Refiners will shift to procuring crude from Middle East as well as other countries as was the case earlier. Though this will be more expensive than Russian Urals and will impact the gross refining margins," said one of the sources mentioned above.
However, Reliance Industries and Nayara Energy, which procure crude on a term basis from Russia, may continue to buy, sources said. The two, over the past years, have profited from exporting refined products to Europe, their most profitable market.
IOCL, BPCL, HPCL, MRPL, RIL, and Nayara Energy did not respond to an email query till press time.
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On July 17, oil minister Hardeep Singh Puri warned that taking Russian supplies off the market could push oil prices to $130-140 per barrel, detailing the potential impact of secondary sanctions. India would quickly switch to alternative sources to meet its oil demand if any supply were cut off, Puri said, adding that the world is currently awash in oil, which is helping keep prices in check.
India's crude oil imports from Russia were around $50.3 billion in FY25, more than one-third of India's total crude expenditure of $143.1 billion.
