India to increase Iraqi oil imports amid Russian sanctions

Shafaq News/ India's crude oil supplies from Russia may face challenges due to higher shipping costs resulting from new sanctions on Moscow, but the country’s diversification strategy will mitigate supply disruptions, ensuring refiners remain well-stocked, the Federation of Indian Petroleum Industry (FIPI) told S&P Global Commodity Insights.

FIPI Director General Gurmeet Singh said India had not encountered disruptions to shipments already in transit but had developed contingency plans to secure alternative supplies, depending on geopolitical developments.

"The sanctions could result in higher costs of landed crude oil for Indian refiners," Singh said in an interview with S&P Global. "A reduction in crude volumes from Russia would require sourcing replacement barrels from the Middle East, Africa, and the United States."

The United States and the United Kingdom announced fresh sanctions on Russia’s energy sector on Jan. 10, targeting two major Russian oil producers as part of efforts to curb Moscow’s oil revenues. The restrictions also blacklisted more than 180 ships, oil traders, oilfield service providers, and tanker owners, according to the US Treasury.

S&P Global data showed that 95% of newly sanctioned vessels had transported crude oil and refined products from Russia. In 2024, about 1.5 million barrels per day (bpd) of Russian-origin crude were shipped on these vessels, with approximately 900,000 bpd heading to China and 450,000 bpd to India.

Alternative Supplies

According to S&P, India’s crude imports from the Middle East, particularly from Iraq and Saudi Arabia, are expected to rise as further sanctions on Russia take effect, Singh said. Imports from the United States could also increase.

Russian oil accounted for about 35% of India's total crude imports in 2024, or roughly 4.9 million bpd, according to S&P Global data. The Middle East and Russia combined made up nearly 80% of India's total crude intake.

India’s oil demand is forecast to grow over the next two years, contributing 25% of global consumption growth, driven by strong air travel demand and robust road transport activity, Singh said. India’s economy is projected to expand by 6.6% in 2025, reinforcing its role as a major driver of global oil consumption.

S&P Global pointed out that India's oil product demand rose by nearly 4% year-on-year in 2024 to 4.82 million bpd. The country's oil demand is expected to grow at 3.2% in 2025, outpacing China’s projected 1.7% growth rate.

Refining and Petrochemicals

India has emerged as a global refining hub, with capacity reaching 256.8 million metric tonnes, making it the fourth-largest refining nation after the United States, China, and Russia. Plans are in place to expand capacity to 310 million metric tonnes by 2030, Singh said.

By 2028, approximately 58% of India's refinery capacity additions will come from brownfield expansions, while the remainder will stem from greenfield projects, S&P Global data showed.

Singh emphasized the importance of petrochemical expansion, citing a projected investment exceeding $87 billion over the next decade. "With per capita petrochemical consumption in India at 10-12 kg compared to the global average of 33-35 kg, increasing petrochemical output is a strategic priority," he said.

India is also promoting foreign investment in the sector, allowing 100% foreign direct investment and establishing specialized investment regions for petroleum and petrochemicals.

As energy demand grows, Singh said India’s oil and gas industry will play a key role in the global energy transition by adopting low-carbon solutions and expanding product portfolios to align with shifting market trends.