Whalesbook
Indian refiners are significantly increasing their purchases of Russian crude oil, securing approximately 60 million barrels for April delivery. This surge comes as Middle East supply routes face severe disruptions, forcing India to secure vital energy sources. The deals are reportedly struck at premiums of $5 to $15 per barrel above Brent crude. These transactions are facilitated by recent U.S. waivers, specifically General License 133, which permits the delivery of Russian oil loaded before early April. Brent crude futures have shown volatility, trading around $98.79 per barrel on March 25, 2026, with forecasts suggesting prices could remain above $95 for the next two months.
Shifting Supply Sources
This increased reliance on Russian oil marks a strategic pivot for India. Earlier in 2025 and early 2026, India had reduced Russian imports under U.S. pressure, turning to suppliers like Saudi Arabia and Iraq. However, the current conflict in the Middle East has disrupted these traditional flows, particularly those transiting the Persian Gulf. As a result, Russian crude, even at a premium, has become a necessary alternative. India is also boosting imports from Venezuela, with about 8 million barrels projected for April delivery, its highest volume since October 2020. With India relying on imports for roughly 88% of its crude needs, this diversified approach aims to hedge against persistent instability affecting conventional supply routes.
Geopolitical Risks and Waivers
India's growing dependence on Russian and Iranian oil places it in a complex geopolitical position. While U.S. waivers provide temporary relief for deliveries, they carry the risk of renewed sanctions pressure should international dynamics shift. The substantial premiums paid for Russian crude highlight the urgency of securing supply amidst conflict, rather than representing a strategic advantage. The broader Middle East conflict directly impacts India's substantial oil supplies from Gulf nations, compelling a reliance on sources with their own complex international relations and potential vulnerabilities.
Company Impact and Valuation Scrutiny
Refining companies involved in these increased imports, such as Reliance Industries Ltd. and Mangalore Refinery & Petrochemicals Ltd. (MRPL), face direct impacts from elevated crude costs and price volatility. As of March 2026, Reliance Industries carried a trailing twelve-month (TTM) Price-to-Earnings (P/E) ratio between 19.6x and 25.9x. This is considerably higher than domestic public sector peers like Hindustan Petroleum Corporation Ltd. (HPCL) at 4.9x and Bharat Petroleum Corporation Ltd. (BPCL) at 5.4x. MRPL traded at a TTM P/E ratio of approximately 14.64x to 15.69x, near the Indian Oil & Gas industry average of around 15.5x. However, some analyses suggest MRPL may be overvalued relative to its fair price or peers, with one report labeling it "Significantly Overvalued." Reliance's higher P/E ratio reflects a conglomerate premium, but its refining segment remains exposed to the immediate effects of higher crude costs on margins.
Supply Chain Vulnerability and Outlook
The core challenge for India remains its significant dependence on imported crude, with a substantial portion previously transiting the Strait of Hormuz. Although diversification efforts are underway, the current crisis underscores the fragility of global energy flows. Prolonged conflict could sustain elevated oil prices, impacting India's trade balance and domestic inflation. Analysts like Goldman Sachs have raised 2026 Brent forecasts to $85/barrel due to Hormuz disruptions, while the U.S. EIA forecasts Brent falling below $80/bbl later in 2026, depending on the conflict's duration. The Strait of Hormuz alone handled approximately 15 million barrels per day of crude and 5 million b/d of products in 2025. Ultimately, India's immediate future for crude procurement hinges on the duration of the Middle East conflict and the continued availability of U.S. waivers, while Russia benefits from the elevated export earnings generated by these sales.