India’s oil firms may not be hit as hard by Russia curbs as feared: ICICI Securities

Rising geopolitical tensions around Russia and the threat of tougher US actions have unsettled global oil markets. But according to Probal Sen, Energy Analyst at ICICI Securities, the direct impact on Indian oil companies may be much lower than markets fear.

The oil markets have been nervous after US Senator Lindsey Graham said President Donald Trump had given the green light to a bipartisan bill that could impose tariffs of up to 500% on countries buying Russian oil. The proposed legislation could impact buyers such as India, China and Brazil, over Russia’s war with Ukraine.

Indian refiners have already reduced their exposure to Russian crude significantly. Reliance Industries’ intake is now close to zero, while HPCL has cut Russian supplies to less than 10% of its total crude basket.

Sen pointed out that the effective discount on Russian oil, after accounting for freight, insurance, and compliance costs, has narrowed to about $3-4 a barrel,  limiting the benefit to refiners.

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From India’s perspective, this means refinery margins are unlikely to take a major hit if Russian crude volumes fall further. The bigger concern lies elsewhere. Sen cautioned that the key risk is whether refiners can quickly replace Russian barrels without disrupting operations. Any difficulty in sourcing alternatives could affect refinery throughput.

Sen warned that if a large part of Russian oil is removed from the market, the widely discussed supply surplus could disappear. “Taking out 4.50-5 million barrels of supply from the global markets is just not feasible,” he said, highlighting how tight the oil balance could become.

He added that OPEC alone cannot fully bridge this gap, and while Venezuela is often mentioned as an alternative source, it can add only limited supply in the short term. Meaningful output increases from Venezuela would need heavy investment and time.

For India, there is some strategic comfort. Certain refiners, including Reliance and Nayara, can process heavy crude such as Venezuela’s, which could help if supply patterns shift. Still, Sen made it clear that oil markets are now being driven as much by geopolitics as by fundamentals.

For full interview, watch accompanying video

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