India Hits the Russia Reset Button as Oil Flows Hit Near-Record Levels

The recent temporary easing of U.S. sanctions on Russian crude has had a significant impact on global oil flows, particularly in the Asian market. Despite the seasonal easing of overall imports, Russian volumes into Asia have surged, tightening the market and leading to a rare $8/bbl premium of Urals over Brent. The decision by Washington on March 12 to allow sales of oil already loaded onto tankers had an immediate effect, absorbing almost all of Russia’s floating storage and drawing hesitant buyers back into the market.

Since the U.S. sanctions were imposed in October 2025, India had been gradually reducing its dependence on Russian crude. However, in March, crude oil volumes from Russia surged to a record 2.06 million b/d, almost doubling month-on-month. This increase in Russian imports comes at a time when total crude imports to India are declining, a mix of seasonal slowdown and crisis-driven adjustments. India’s crude intake typically peaks between October and April, with refiners scheduling maintenance during the monsoon months from July to September.

Despite the lower-than-usual export volume of 4.4 million b/d in March, India has managed to maintain its crude intake, given the challenging circumstances. With the disruption of flows through the Strait of Hormuz in February, India lost access to its second-largest crude supplier, Iraq, as well as a significant reduction in volumes from other Middle Eastern suppliers. In response to these challenges, India has doubled its purchases of Russian crude and has also purchased Venezuelan crude to substitute for lost supplies from the Middle East.

The increase in Russian crude imports by India is part of a broader trend in Asia, with China also increasing its intake of Russian crude. Russian seaborne exports to China have reached peak levels in 2026, indicating Moscow’s success in expanding its footprint across Asia. In addition to India and China, other Asian countries like the Philippines, Brunei, Thailand, Vietnam, and Sri Lanka are also increasing their imports of Russian crude.

However, the window for these trades is narrowing as the sanctions relief only applies to cargoes loaded before March 12. With the storage buffer rapidly shrinking and infrastructure risks mounting, the market for medium-sour crude is tightening. Ukrainian drone strikes on Russian export infrastructure have also raised concerns about potential supply constraints in the coming months.

In conclusion, the easing of U.S. sanctions on Russian crude has led to a restructuring of crude flows in the Asian market. Russian barrels, once discounted and politically constrained, are now actively competing and regaining market share among key Asian buyers. As the market tightens and infrastructure risks increase, the room for maneuvering is shrinking fast for countries like India and its regional peers.

By Natalia Katona for Oilprice.com