Indian refiners to continue paying for Russian oil in dirhams
Moneycontrol
.
On 18 July, the EU lowered the price cap for Russian oil to $47.6 per barrel, down from the previous $60, as part of its 18th package of sanctions related to the ongoing conflict in Ukraine. Indian officials stated that these measures do not currently affect India's procurement of Russian oil due to transactions routed through traders based in the United Arab Emirates (UAE).
A senior refinery executive told
Moneycontrol
, 'EU sanctions would not have a direct impact as of now because we are buying through UAE traders.'
Impact of US tariff threats and payment shifts
On July 30, US President Donald Trump announced increased tariffs on India and alluded to further penalties related to New Delhi's defence and energy trade with Moscow. He reiterated these warnings on 4 August, stating on Truth Social that India profits from reselling Russian oil and criticised its stance on the Ukraine conflict.
India's Ministry of External Affairs responded that its energy policy is guided by national interest. Officials also noted that while
Indian refiners
initially used dollars for some transactions with Russia—particularly through Rosneft—they have now shifted entirely to dirham-based payments, as attempts to establish a rupee-rouble mechanism were unsuccessful.
Indian Oil Corporation
Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL) are among the refiners involved. One executive confirmed, 'We were not making dollar payments even with a $60 price cap... Russian oil purchase is done through UAE traders in AED.'
Another government official stated that Indian refiners are not currently exploring alternative currencies for these transactions and that no progress has been made on rupee-rouble settlement mechanisms.
Rising reliance and market trends
India's share of Russian crude imports rose sharply from 0.2 percent before the war in Ukraine to around 35–40 percent of total crude imports. Petroleum Minister Hardeep Singh Puri indicated in July that India could revert to earlier sourcing practices if secondary sanctions are imposed.
On July 26, President Trump shortened the deadline for Russia to end its military action to 15–20 days and reiterated threats of 100 percent tariffs and secondary sanctions on nations continuing energy ties with Moscow.
Data from global analytics firm Kpler shows that India's
Russian oil imports
fell by 24 per cent in July compared to June, totalling 1.6 million barrels per day. Lead research analyst Sumit Ritolia explained that the decline was tied to seasonal refinery maintenance and reduced monsoon demand rather than the tariff threats.
Ritolia also noted that while refiners may be able to lower Russian crude intake, full disengagement is unlikely without direct government instruction. Russian grades such as Urals offer suitable refining margins and technical compatibility, making them viable feedstock options.
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