Sanctions drive Indian oil toward Brazil, cutting reliance on Russian crude

Indian Oil Corporation (IOC), the country’s largest refiner, plans to purchase at least 24 million barrels of Brazilian crude over the next two years as it continues to diversify its oil imports, said an executive, Bloomberg reports.

The executive at the state-owned firm, who requested anonymity, noted that IOC purchased 18 million barrels of Brazilian crude last year. “These purchases are part of a broader push to diversify global oil supplies following a slowdown in Russian crude imports due to Western sanctions and geopolitical pressures,” the official said.

The refiner, which recently procured its first crude shipments from Colombia and Ecuador, intends to secure about half of its total crude requirements through term contracts in the coming fiscal year, the executive added, speaking on the sidelines of the India Energy Week conference.

IOC’s move marks a major shift in India’s energy sourcing strategy. The company emerged as a top buyer of discounted Russian seaborne crude after Moscow’s invasion of Ukraine in 2022. However, the evolving sanctions landscape has made alternative supplies — including Brazil, the Middle East, and the Americas — increasingly attractive.

“Beyond Brazil, Indian refiners are evaluating other supply options, including Venezuelan crude being offered under US-mandated sales,” the source said, noting that “current discounts on Venezuelan grades — roughly $4–$5 per barrel below Dubai quotes — have so far been less compelling than the deeper discounts refiners historically sought from Russian supplies.”

Russian Urals crude has historically been a mainstay for Indian refiners. February cargoes traded at discounts of $10 per barrel to dated Brent for delivery to Indian ports — close to the widest discount on record — amid intensified pressure from Western sanctions, according to two industry sources. This represents a $3–5 per barrel increase from estimates for cargoes loading in the autumn months of last year.

Late in 2025, the US imposed its toughest sanctions on Russia’s energy sector, targeting oil majors Lukoil and Rosneft, and added a 25% extra import tariff on Indian goods, linking the measure to New Delhi’s continued imports of Russian oil. US Treasury Secretary Scott Bessent recently signaled the potential removal of the additional tariffs following a sharp reduction in Indian purchases of Russian crude.

New Delhi has cut its oil imports from Moscow over the past two months, with sanctions diverting more Russian barrels to China. The wide discount offered on Urals crude may still attract additional Indian refiners, but India is actively seeking alternatives, one trader said.

For March loading, IOC has already purchased 7 million barrels of crude, including shipments from Brazil’s Petrobras, to replace Russian oil, according to two trade sources familiar with the matter. Since 2023, Urals crude has been a central feedstock for Indian refiners after Moscow redirected flows to Asia following European Union restrictions on Russian energy.

By Vafa Guliyeva