In doing so, Iraq, the no. 1 crude exporter to India from fiscal 2018 until FY2022 when the Ukraine war began, is back as a strong force in the Indian oil market and fast catching up with Russian supplies, latest data shows. Russian oil imports have been falling since recent US sanctions on two of its biggest exporters.
Iraq supplied 1.06 million barrels of oil daily (mbpd) in the first month of 2026 (until 20 January) as compared to 1.10 mbpd from Russia, according to Kpler, a market intelligence provider for commodities, energy, and maritime sectors.
This comes in the backdrop of refiners in India, the world’s third largest oil buying nation, cutting back on Russian oil imports after US sanctions on Rosneft and Lukoil late in October 2025 in spite of discounts of up to $8 per barrel on offer. Such discounts, at a high of $30 a barrel in 2022, had China and India becoming the top buyers of Russian oil.
In FY25, Russian oil comprised about 35% of India’s crude imports compared to about 2.5% prior to the Ukraine war. In FY22, Iraq accounted for about 26% of India’s oil imports before it was dislodged from the top spot by Russia.
Easy supply swing
India imports nearly 90% of its oil requirement totalling to some $161 billion last fiscal. This momentum of growing imports is likely to continue with growing consumption projected at a record 252.9 million metric tonnes in FY26, according to India’s petroleum and natural gas ministry’s Petroleum Planning & Analysis Cell. This marks a 4.65% increase from FY25.
As the US sanctions take hold, West Asia becomes the natural choice for Indian refiners, an expert noted. “Further, the large West Asian suppliers, including Saudi, UAE and Iraq have significant spare capacity, due to which they can ramp up supplies at a short notice,” said Prashant Vasisht, senior vice president and co-group head, corporate ratings, Icra Ltd said.
Better rates on Iraqi crude compared to other West Asian sources help, an oil executive said. “Their OSP (official selling price) is in most cases better than that offered by Saudi Aramco, the UAE and other gulf countries,” said an executive with a state-run refiner asking not to be identified.
Refiners also said that Iraq usually provides better terms such as longer credit period, ranging between 60 to 90 days.
“Also, amid rising Iraqi imports, several Indian refiners have calibrated their operations to refine Basra Light crude grade produce in southern Iraq,” said the executive. Basra Light is suitable crude variant for production of diesel, which is produced more by Indian refiners compared to petrol or aviation turbine fuel.
Russia tapers
Sumit Ritolia, lead research analyst for refining and modelling at Kpler said India’s supply choices today reflect changing oil economics, supply chain predictability, and rising execution complexity around Russian crude, including shipping, insurance, payment pathways, and compliance screening. “The result is a clear rebalancing of India’s crude slate, with Middle East inflows rising as refiners prioritize supply reliability, flexibility, and smoother cargo execution,” Ritolia said.
India is the world’s fourth largest refiner with an overall refining capacity of 258.1 million tonnes per annum (mtpa). This is expected to be further scaled up to 310 MTPA by 2029, when new capacity including Bharat Petroleum Corporation Ltd (BPCL)’s Andhra Pradesh refinery and Hindustan Petroleum Corp Ltd (HPCL)’s refinery in Rajasthan come up. They, in turn, will need to secure crude oil to refine.
Oil exports from Iraq to India have been rapidly increasing, with only a gap of 40,000 barrels a day (bpd) between supplies from Russia in January (until 20 January). In December, Iraq had supplied 904,000 bpd, 313,000 barrels lower than the supplies from Russia, which stood at 1.21 mbpd. In November, the gap was even wider at 884,000 barrels with Iraq supplying 952,000 bpd, compared to 1.84 mbpd by Russia.
Experts expect supplies from Russia would average around 1.2 mbpd in the January-March period compared to 1.8 million in the last four-five quarters.
The supplies from Iraq, which had taken the place of Saudi Arabia as the top source of crude oil for India in fiscal 2018, have surged above the 1 mbpd mark for the first time since May last year.
Other key suppliers from West Asia are Saudi Arabia and the United Arab Emirates (UAE) with supplies of 891,000 bpd and 385,000 bpd until 20 January. In December, Saudi Arabia exported 710,000 bpd (up from 655,000 bpd in November) to India, while UAE supplied 592,000 bpd.
De-risking, not replacing
According to a report by Finland-based think tank Centre for Research on Energy and Clean Air (CREA) released on 13 January, India’s Russian crude imports recorded a sharp 29% month-on-month reduction in December to the lowest volumes since the implementation of the price cap policy. The cap was announced by the G7 in December 2022 setting a maximum price of $60 per barrel for Russian oil that could be paid by purchasers across the globe. Non-compliance could attract sanctions and other legal actions on the buyers and the financers involved. European Union has now lowered the price cap to about $44.10 per barrel.
Even while Russia seems to be fading away from the India crude supply map, prices and discounts will still play an important role, Kpler’s Ritolia said. “Energy security and diversification are shaping the narrative, but refinery economics still drives the decision-making. India’s January 2026 crude purchasing strategy is best described as de-risking, rather than replacing.”
Russia remains in the system even if it is losing marginal share, he added.
After the US intervention in Venezuela, the global oil market has faced further uncertainty with concerns of productivity of its oil wells balancing out expectations of new supplies from a country that has the world’s largest crude oil reserves.
“If Venezuela opens up, it would be favourable for Indian refiners as it would give more options and the crude would be cheaper and several India refineries are now well equipped to refine the viscous crude (from there),” said Icra’s Vasisht.
Apart from West Asia, the US (351,000 bpd in January so far), Nigeria (216,000 bpd), Guyana (210,000 bpd), Brazil (239,000 bpd) are some of the key suppliers to India. On Friday, the petroleum ministry announced that state-run BPCL will sign a term contract with Brazil’s Petrobras to source 12 million barrels of Brazilian crude oil grades worth $780 million.
Queries emailed to the spokespersons of Indian Oil Corp Ltd, BPCL, HPCL, Reliance Industries Ltd, and Nayara Energy remained unanswered until press time.