The economics of Indian refineries underwent a fundamental shift in late 2025 as tariff-related costs began to exceed the benefits of discounted crude pricing. While US crude imports to India increased by 65.6% to $8.2 billion during April-December 2025, Russian crude imports contracted by more than 17%, falling from $40 billion to $33.1 billion in the same period.
December 2025 reflected the changed economic calculus. Russian crude shipments to India, traditionally purchased at significant discounts, declined by 15.15% to $2.71 billion from $3.2 billion in December 2024. Despite continued price advantages, the volume of Russian crude purchases fell sharply, indicating that other economic factors outweighed the discount benefits.
Alternative suppliers without pricing discounts captured increased market share. Saudi Arabia expanded deliveries by 61% to $1.75 billion in December 2025, despite typically charging higher prices than Russian suppliers. The United States, also a premium-priced supplier, increased shipments by 31% to $569.30 million. Iraq contributed $2.37 billion, up 4.56%, while the UAE supplied $1.65 billion, up 6% annually.
The shift in refinery economics resulted from the US imposition of a 25% punitive tariff on Indian goods on August 27, 2025. This tariff created substantial costs for Indian exports, effectively negating the savings from purchasing discounted Russian crude. Refiners recalculated their total economic position, with many concluding that avoiding tariff impacts through reduced Russian purchases made better business sense. Russian crude imports declined from $3.62 billion in July 2025 to $2.71 billion in December 2025.
India’s total crude oil imports from all sources reached $11.29 billion in December 2025, up 9.1% from $10.34 billion in December 2024. Cumulative imports for April-December 2025 totaled $105.10 billion, compared to $109.33 billion in the corresponding period of 2024. The economic shift demonstrates how trade policy can fundamentally alter procurement decisions.
