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Informist, Friday, Aug. 8, 2025

 

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--Kpler's Ritolia: Replacing Russian oil will hurt domestic supply, exports
--CONTEXT: Kpler lead research analyst Sumit Ritolia's comments in interview
--Kpler: Reducing Russian oil buys complex; will push up cost, disrupt yields
--Kpler: Indian oil refineries among most complex in world
--Kpler: Reducing Russian oil import would mean higher prices, lower margins
--Kpler: India can import more LNG, crude oil from US for tariff relief
--Kpler: See India diversifying oil basket gradually instead of sudden cut

 

By Pallavi Singhal

 

NEW DELHI – India faces a growing energy dilemma as pressure mounts from the US and Europe to reduce imports of Russian crude oil and global tariffs and sanctions threaten to upend its finely balanced oil procurement strategy. With Russian oil accounting for over a third of India's import basket, recent moves by US President Donald Trump to raise tariffs on Indian exports to a combined 50%, citing continued oil purchases from Russia, have brought India's drive for affordable and secure energy into the spotlight.

 

As Washington and Brussels leverage trade measures, New Delhi is standing its ground, arguing that abrupt change could roil domestic markets, spark inflation, and do little to slow Moscow's exports, which would likely be rerouted elsewhere. India will continue to hedge, scaling back Russian imports if absolutely necessary but not eliminating them entirely unless forced to, believes Sumit Ritolia, lead research analyst, refining and modelling, at Kpler, a data and analytics provider for global trade specialising in energy and shipping markets.

 

India's focus remains affordability, energy security, and pragmatic, phased diversification in response to changing global dynamics, he told Informist in an interview. "Let's remember, abrupt changes could hit domestic inflation, currency stability, and broader fiscal management almost overnight," he said. Long-term, Ritolia foresees careful, strategic evolution, not a sudden divorce from Russian energy.

 

Following are edited excerpts from the interview:

 

Q. Why isn't this debate just about barrels? Isn't it a simple matter of switching suppliers?

A. It's not simply about stopping Russian oil anymore--it's about controlling trade flows and maintaining balance. India's priority is energy security. Tariff politics alone won't dictate our decisions; discussion and deliberate policy direction are needed. Unless the government issues formal directives, refiners have little incentive to abandon Russian barrels, which remain exceptionally well-suited to our refinery system and crucial for margins.

 

Q. Why have Russian barrels become so entrenched in India's supply chain?

A. The compatibility of Russian crude with Indian refineries goes beyond price. Our system, among the most complex worldwide with a Nelson Complexity Index over 12, is optimised for flexibility. Major plants like Reliance's Jamnagar or Nayara's Vadinar can process a wide slate, including Russian grades like Urals. These barrels yield high-value products, especially diesel and jet fuel, and work perfectly with secondary units like cokers and hydrocrackers. Wider discounts post-2022 simply turbocharged their share.

 

Q. Could India cut Russian crude imports quickly if forced to?

A. Reducing Russian imports is far more complicated than flipping a switch. We are talking long-term contracts, refinery setups, and operational adaptability that took decades to build. Switching overnight would spike procurement costs, disrupt product yields, and undercut export competitiveness. For many large state-run refiners, who have less flexibility than their private counterparts, sudden redirection could mean higher prices and squeezed margins.

 

Q. What would be the commercial cost for India to pivot away from Russian oil?

A. A technical reconfiguration is possible, but commercially it's painful. Shifting away from Russian barrels would require reoptimising main feedstocks, adjusting yields towards lighter products, and potentially underutilising units that were built for heavy conversion. The direct capital outlay might be manageable, but the knock-on effects--lower yields, loss of margins, and logistical headaches--are significant. If we replace Russian crude with only lighter grades from the Middle East (West Asia) or US without blending, middle distillate output would drop, impacting both supply at home and our export position.

 

Q. What options does India have to mitigate these threats?

A. The government has a narrow corridor for action. Some short-term options include:

1.  Diplomatic recalibration, wherein India can offer expanded LNG (liquefied natural gas) or US crude offtake in return for tariff relief.

2.  Partial diversification, where India can let private refiners maintain Russian imports while public-sector refiners rebalance towards the Middle East or US, thus balancing political optics and energy needs.

3.  India can expand its energy diplomacy by building stronger trade links with producers in Latin America and Africa, like Brazil, Guyana, and Angola, for alternative sources.

 

In truth, barring a hard mandate, we expect gradual diversification, not a sudden overhaul. Sourcing alternatives exist, but they bring higher costs and logistical constraints. A full pivot away from Russia is unlikely unless the government mandates it outright.

 

Q. What happens to Russian crude if India stops importing oil from Russia? How will it impact Russian oil exports globally?

A. Not likely (to have an impact). Cutting India out of the Russian oil trade won't choke Russian exports; flows would simply be rerouted to buyers like China or through opaque third-party intermediaries. This would reinforce the already existing two-tier global oil market, with discounted Russian crude moving through indirect channels while flat prices elsewhere climb due to tighter balances and redirected demand.  End

 

Edited by Rajeev Pai

 

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