Reliance ‘Recalibrating’ Purchases, a '$2.7 Billion Hit': How US Sanctions Against Two Russian Oil Companies Affect India

New Delhi: With Washington imposing sanctions on Russia's two largest oil companies and threatening secondary sanctions against foreign entities that deal with them, Reliance Industries, which had struck a long-term supply deal with one of the two companies Rosneft, is ‘recalibrating’ its Russian oil purchases. The other sanctioned company is Lukoil.

“Recalibration of Russian oil imports is ongoing and Reliance will be fully aligned to GOI (Government of India) guidelines,” Reuters quoted a Reliance spokesperson as saying when asked if the firm intends to slash its crude imports from Russia.

Reliance is also the single-largest Indian consumer of Russian oil.

The news agency had earlier reported citing sources that Reliance would “stop” importing oil under its ten-year deal with state-owned Rosneft that was inked in December and which entails daily sales of close to five lakh barrels of crude.

Early on Thursday (October 23) Indian time, the US treasury department announced it will sanction Russian oil majors Rosneft and privately held Lukoil as well as a number of their subsidiaries starting November 21.

Subsequently, the EU too announced a package of measures against Russia, including a phased halt of Russian LNG imports into the bloc, further restrictions on dealings with Rosneft and state-owned oil firm Gazprom, as well as sanctions on a number of entities among which three are located in India.

Washington's announcement, which would mark the current Trump administration's first direct sanctions on Russia for its continuing invasion of Ukraine, was accompanied by a threat to impose secondary sanctions on foreign firms “engaging in certain transactions involving” the sanctioned entities.

Impact

Russia is the largest supplier of crude oil to India since FY23.

The American sanctions and Reliance's decision to ‘recalibrate’ come after US President Donald Trump repeatedly claimed that Prime Minister Narendra Modi had assured him India would significantly cut down its Russian oil purchases, something that has been a stated goal of Washington's ostensibly in line with its objective of depriving Moscow of funds for its war.

As part of this policy the Trump administration has also imposed a 25% tariff on Indian goods as a penalty for New Delhi's continuing purchases of Russian oil, which went into effect on top of an identical ‘reciprocal’ levy in light of the trade imbalance between the two countries.

“There will be no oil. He [Modi]'s not buying his oil from Russia. It's started – you know, he can't do it immediately, it's a little bit of a process, but the process is going to be over with soon,” Trump had said last week, adding that New Delhi will “go back to Russia after the war's over”.

Asked about Trump's remarks, the Ministry of External Affairs while neither confirming nor denying a decision to pull back on Russian crude purchases said that India was already “diversifying” its sourcing, which is seen as an implicit signal that New Delhi is moving away from Moscow for oil.

A report by LiveMint pegged possible Indian losses at $2.7 billion.

“The sanctions by the US on certain Russian crude oil producers are likely to impact the purchases by India as these suppliers accounted for about 60% of the volumes purchased,” said Prashant Vasisht, senior vice president and co-group head, corporate ratings, Icra Ltd was quoted as having said. “While India can substitute the purchases from Russia with suppliers from the Middle East and other geographies, the impact on the import bill would be immediate.”

Reliance and the Rosneft-backed Nayara Energy are the two biggest buyers of Russian oil in India, which in turn has emerged as the second-biggest importer of Russian crude after China, taking advantage of cheap prices triggered by Western measures imposed in the wake of Moscow's invasion of Ukraine.

Nayara, which was not directly named in the US treasury department's list of companies slated for sanctions, is 49.13% owned by Rosneft and has already been hit by EU and UK sanctions.

“Availability isn’t so much an issue as the cost of oil in the global markets. Oil from West Asia, the Mediterranean, the US and the likes can come in; however, India may not be offered discounts by these suppliers as was the case with Russia,” Deepak Mahurkar, partner Oil and Gas at PwC India told LiveMint. “This may increase the import bill, but the availability of oil to replace Russian crude would not be a major issue.”

Figures released by maritime data provider Kpler showed that while state-owned Indian refiners – which mostly do not buy oil directly from Russia, instead procuring it through intermediaries – reduced their purchases of Russian crude by over 45% between June and September, while Reliance and Nayara ratcheted up their imports.

Reacting to Reliance's statement Thursday, the Congress said it is “proof that Narendra Modi bows to foreign pressure”.

“Trump says – “Stop the war”. Trump says – “Don’t buy Russian oil”. And Modi nods in silence, following every cue. Now, even Reliance, one of India’s biggest Russian oil buyers, suddenly “recalibrates” its imports – perfectly in line with the Modi government's new “guidelines”,” the party said in a post on X.

It added: “It is a proof that Narendra Modi bows to foreign pressure. A leader who can’t defend India’s interest is no leader at all.”

The party's ‘stop the war’ remark is a reference to Trump's persistent claims that he precipitated the ceasefire between India and Pakistan in May using trade as leverage, a claim that New Delhi has denied.

Moscow reacted to the US sanctions announced on Thursday saying that the measures could undermine diplomatic efforts to end the war in Ukraine but insisted the measures would have little impact.

Ukrainian President Volodymyr Zelenskyy welcomed Washington and Brussels's moves. “We waited for this. God bless, it will work. This is very important,” he said on Thursday. “Pressure means sanctions packages, long-range air defense and of course, financial support.”

With inputs from DW.

This report, first published at 00.55 am on October 24, 2025, was republished at 4 pm on the same day with additional information.

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