New Delhi: Since the US announced a 30-day waiver from 5 March for India to procure Russian oil loaded on ships, Indian refiners have been buying both sanctioned and non-sanctioned Russian oil at sea, two people in the know of the development told Mint. Russia has been India’s top oil supplier since 2022. However supplies have declined following sanctions in December on Rosneft and LUKOIL, two of Russia's largest oil producers.
"The latest waiver by the US Department of Treasury for India allows refiners to purchase oil from all Russian sources which were loaded on vessels till the specified time of 5 March, as per the OFAC (Office of Foreign Assets Control) notification. So they are trying to procure all the oil on sea that's on offer," officials said.
On Friday, US Treasury Secretary Scott Bessent said Washington would allow a 30-day waiver for Indian refiners to purchase Russian oil stranded at sea, offering temporary relief amid global supply concerns. A notification by the OFAC, under the US Department of Treasury, said the relaxation applied to Russian-origin crude oil loaded on vessels on or before 12.01 AM Eastern Standard Time (10.31 AM IST) on 5 March 2026.
Energy markets remain volatile amid escalating tensions in West Asia and supply disruptions around the Strait of Hormuz. Taking to X, Bessent said the stop-gap measure would alleviate pressure caused by Iran’s attempt to hold global energy hostage. Describing India as an essential partner of the US, he said the US expects New Delhi to ramp up purchases of American oil.
Mint reported earlier that Indian refiners were likely to increase their oil imports from Russia as fresh oil supplies from West Asia dwindled. Although imports from Russia dipped following the sanctions and the announcement of India's interim trade deal framework with the US, they did not halt completely, with supplies continuing to come in from non-sanctioned entities.
Already in high demand, Russian oil is now being sold at a premium to the benchmark Brent crude, having been sold at a discount since the Ukraine war began in 2022. The April contract of Brent on the Intercontinental Exchange closed at $92.69 per barrel, up 8.52% from its previous close.
India is also exploring new sources of oil, with about 50% of its imports from West Asia choked off with the Strait of Hormuz blockade. The country is the fourth-largest refiner in the world with a capacity of around 268 million metric tonnes per annum. An increase of $1 per barrel for a year leads to a rise of around ₹16,000 crore in India's import bill. In February, Russia supplied India with 1.04 million barrels of oil per day (bpd) on average, followed by 1 million bpd by Saudi Arabia and 980,000 bpd by Iraq, according to data from global ship tracking firm Kpler.
Another official said the supply of crude from sources other than West Asia has increased, and the stock position for crude, liquefied natural gas (LNG) and liquefied petroleum gas (LPG) is "comfortable" so far.
More LPG imports from the US
To address the current LPG shortage, Indian oil marketing companies are scaling up imports from the US, a supply chain pivot that first began in January, when India began receiving its first major contracted volumes of LPG from the US under a new long-term agreement expected to cover roughly 10% of the country’s total LPG imports.
The development is significant as state-run oil marketing companies increased the price of domestic cooking gas by ₹60 per cylinder on Saturday amid the West Asia crisis and supply shortage. The second such increase in less than a year increases the cost of non-subsidised LPG from ₹853 to ₹913 per 14.2-kg cylinder in Delhi, according to the Indian Oil Corporation (IOC) website. For more than 100 million Pradhan Mantri Ujjwala Yojana beneficiaries, the price will be ₹613 per 14.2-kg cylinder after accounting for the subsidy of ₹300 per cylinder they get for up to 12 refills in a year.
A third official, who also wished to remain anonymous, said, "As India is a net importer of LPG, domestic prices are linked to international benchmarks such as the Saudi Contract Price (CP). Over the past few years, international LPG prices have witnessed significant increases. For instance, the Saudi CP rose from $415 per metric tonne in 2020-21 to $712 per metric in 2022-23. Yet the government ensured that the full impact of these increases was not passed on to consumers.” Assuming average consumption of 4-5 cylinders per year by a household, the increase would translate to 80 paise per day for a family of four people, or a 20 paise increase per person per day, the official added.
Amid a global crunch in LPG supplies, the government has already directed all state-run and private-sector refineries in the country to step up production of domestic cooking gas by diverting feedstock away from the manufacturing of non-essential products, including petrochemicals. Using its powers under the Essential Commodities Act, 1955, the ministry has directed all refiners to supply LPG to the three state-owned refiners – Indian Oil Corp Ltd, Bharat Petroleum Corp Ltd, Hindustan Petroleum Corp Ltd – which will in turn supply it only to domestic consumers of cooking gas.
The development is significant as India has only about 25 days of LPG stock. Annual demand stands at 33.15 million tonnes, with imports servicing about 75-80% of this. LPG is produced from propane and butane, which are byproducts of crude oil and natural gas processing.
India is one of the world’s largest LPG importers and relies heavily on West Asian supplies, mostly from Saudi Arabia, Qatar and UAE, and the current disruption in the region could tighten availability for the country. India's LPG imports in FY25 stood at $12.47 billion. Imports in FY26 had already touched $11.25 billion by January. The country produced 12.8 million tonnes of LPG in FY25.