Russia cuts expected 2026 oil output to 17-year low, says report; what it means for India

Russia is expecting its oil production to fall to its lowest level in 17 years this year, even as crude exports rise, with India and China emerging as the main destinations for additional Russian oil amid disruptions caused by the war in Ukraine.

According to a Russian government draft forecast seen by Reuters, crude production is expected to decline by 17.2 million metric tonnes in 2026 to 494.2 million tonnes, or 9.88 million barrels per day.

That would be Russia's lowest annual output since 2009.

The forecast is expected to be finalised later in September 2026 and will be used in preparing the country's budget.

Russia increases crude exports to India, China

Despite the decline in production, Russia expects its crude exports to increase this year, Reuters reported. The draft forecast puts crude exports at 244.7 million tonnes, up from 230.8 million tonnes in 2025 and 7.5 million tonnes above the previous forecast issued in May.

Reuters reported that the increase in crude exports is partly linked to falling fuel production after Ukrainian drone attacks disrupted Russian refineries. With less crude being processed domestically, more oil has been available for export, primarily to India and China.

The development is particularly significant for India, which has sharply increased its reliance on Russian crude since the European Union restricted most imports of Russian oil following Moscow's invasion of Ukraine.

India's Russian oil imports reached a record share in July, accounting for 50.83% of the country's total crude imports, or 2.47 million barrels per day, according to trade data cited by Reuters. Imports were 62.4% higher than a year earlier, although they were slightly below the record level recorded in June.

Russia oil production forecast cut again

The latest Russian forecast represents a substantial downward revision. Oil production estimates for 2026 to 2029 have been reduced by between 16 million and 20 million tonnes compared with the government's May projections.

Production is expected to recover to 500 million tonnes in 2027, but that would still be 16 million tonnes below the earlier forecast. Output is projected to rise further in 2028 and 2029, although it would remain below 2025 levels.

Russia's Deputy Prime Minister Alexander Novak acknowledged in June that oil production had fallen since the beginning of the year, attributing the decline to unplanned refinery maintenance.

Russian crude holds a major share of India's imports

The lower Russian production outlook comes at a time when India has been buying large volumes of Russian oil. Russia accounted for 50.83% of India's crude imports in July, with Indian refiners taking around 2.47 million barrels per day, according to data cited by Reuters.

Russia's share averaged 43.25% during the first four months of India's 2026-27 financial year, compared with 37% a year earlier.

More recent Kpler data reported by Business Standard showed Russian crude imports were expected to fall to about 2.1 million barrels per day in August, from roughly 2.6 million barrels per day in June and July. Even after that decline, Russia remained India's largest crude supplier, accounting for more than 40% of imports.

Why Russia is exporting more crude despite lower output

The apparent contradiction between falling production and rising exports is linked partly to Russia's refining problems.

According to the Reuters report, Ukrainian drone attacks on Russian refineries have reduced fuel production and contributed to petrol shortages. Moscow has responded by restricting exports of gasoline and diesel, leaving more crude available for overseas markets.

Russia's draft forecast puts 2026 crude exports at 244.7 million tonnes, up from 230.8 million tonnes in 2025. Much of the additional crude is expected to move towards Asian markets, particularly India and China.

China is emerging as a rival buyer for Russian oil

India's position as a major Russian oil buyer is not guaranteed. China has recently increased its purchases of Russian crude as it seeks to replace supplies disrupted by the conflict in the Middle East, putting pressure on the availability of Russian barrels for Indian refiners.

This competition could become more important if Russian production falls as forecast. While Moscow expects crude exports to rise in 2026, its draft projections see them declining to 232.5 million tonnes in 2027 and then to 216.6 million tonnes in 2028 and 2029.

Indian refiners are buying large quantities of Russian crude while Russia itself has faced shortages of refined fuel following attacks on its refining infrastructure. India has consequently become an increasingly important player in the wider Russia-Asia energy trade.

The latest Russian forecast therefore points to a changing oil relationship: Moscow expects less crude production but more exports in the near term, while Indian refiners remain major buyers of those barrels. The longer-term question will be how much Russian oil remains available for India as production declines and competition from China intensifies.