India's crude imports fell in August, and Russia's share of them declined as well, exposing a supply problem that seasonal refinery patterns alone cannot explain. The stakes are high: India is the world's third-largest oil consumer and importer, and since 2022 discounted Russian barrels have become the cornerstone of its crude slate, so any sustained squeeze on that flow affects both refinery economics and the country's import bill. Indian refineries usually schedule maintenance toward the end of the monsoon, when domestic diesel and gasoline demand eases, but most refiners have largely postponed this year's work because the current market crisis has produced strong margins on refined products. Demand, meanwhile, has stayed unusually resilient. The more consequential shift lies on the other side of the trade: Russia is exporting less crude both to India and overall, just as China is competing more aggressively for available cargoes. The question for the coming months is whether August represents a temporary retreat or the beginning of a period in which Russian barrels become scarcer, costlier and harder for Indian refiners to secure.

India imported 2.08 million b/d of Russian crude in August, returning to May levels after taking 2.8 million b/d in July. Overall crude imports declined to 4.7 million b/d from 5.05 million b/d, although the August total was still the highest for that month in five years and comfortably above the five-year August average of 4.2 million b/d. Standard refinery maintenance may explain only part of the pullback, since high fuel margins have led most refiners to defer monsoon-season maintenance. BPCL's Mumbai refinery had planned work for September but has reportedly shifted it to November, while only partial maintenance and shutdown work may take place at CPCL's Manali refinery in Chennai in the weeks ahead. Combined with MRPL shutting its 60,000 b/d CDU-I for four weeks, with a return expected toward the end of September, India's autumn maintenance season could feel surprisingly light compared with previous years.

Domestic consumption has been stronger than usual. July demand for both diesel and petrol ran about 10% higher than a year earlier, reaching 8.09 million tonnes and 3.82 million tonnes, respectively. August demand is also expected to have remained stronger year-on-year after El Niño left monsoon rainfall about 15% below the normal average — the lowest level since 2009 — sustaining irrigation demand and limiting the customary monsoon-related reduction in road activity.

The sharper constraint is Russian supply. Total seaborne Russian crude exports fell to 3.7 million b/d in August from 4.1 million b/d in July. The decline was concentrated primarily at the Black Sea port of Novorossiysk, while loadings increased at Kozmino (ESPO) and Ust-Luga. Novorossiysk has been the second-largest departure point for Russian crude exports to India since April 2026 and was also the largest source of lost Indian volumes in August: shipments from the port dropped to 616,000 b/d from 800,000 b/d in July.

Security is one reason. Ukrainian drone attacks in the Black Sea have become a tangible threat to navigation, affecting Russian ships, vessels operated by US companies and the Caspian Pipeline Consortium terminal. The CPC facility, which handles Kazakh crude, has suffered multiple attacks, and its loadings were suspended for several weeks.

Freight economics reinforce the incentive to avoid the Black Sea. Moving a Suezmax cargo from Novorossiysk to India's west coast now costs about $20 million, equivalent to roughly $20/bbl, compared with about $13 million, or $13/bbl, from the Baltic Sea ports. The math favors Baltic loadings, but those voyages carry their own risks, as Russian tankers sailing around Europe face detention or seizure by European countries. That has encouraged greater use of the Northern Sea Route (NSR), for which August and September are peak traffic months even in a normal year because of the thinnest ice levels. With Black Sea drone threats adding pressure, Russian exporters are sending more vessels through the route, logically making China the most cost-competitive destination.

Competition from China is consequently intensifying. Chinese crude purchases rose to 7.4 million b/d in August from 6.9 million b/d in July and a June low of 6.0 million b/d, while its imports of Russian crude climbed to 1.7 million b/d last month from 1.4 million b/d in July. More Urals cargoes are now moving to China instead of India.

Two additional factors are strengthening that competition. Russia is seeking to maximize domestic refining amid fuel shortages as a growing number of plants restart after Ukrainian drone strikes, leaving less crude available for export. Iran, meanwhile, has been drawing down floating storage near the Chinese coast and Singapore that China had recently been able to buy comfortably. With the US Navy effectively blocking the Iranian fleet at the Strait of Hormuz, those inventories are unlikely to be replenished soon, giving Chinese buyers an even stronger incentive to pursue Russian barrels.

India is responding by widening its supply base, although alternative routes remain vulnerable. The UAE retained its position as India's second-largest crude supplier in August, with shipments increasing to 520,000 b/d from 470,000 b/d in July. Saudi Arabian flows fell to 350,000 b/d from 415,000 b/d, mainly because the Bab el-Mandeb Strait closed in late July and Suez-bound cargoes are mostly going to Europe. Saudi shipments in the Gulf have also been constrained by the need to pass through Hormuz and use ship-to-ship transfers near Fujairah, a risky and expensive route.

Iraq and Kuwait are making a gradual comeback to the market. Iraq supplied India with almost 1 million b/d before the crisis, but its flows virtually disappeared in March and April before recovering to 165,000 b/d in August. Kuwait similarly re-emerged with 90,000 b/d after disappearing completely from India's imports between March and July. More distant producers are contributing as well: Brazil and Venezuela together supplied 450,000 b/d in August, up from 420,000 b/d in July, highlighting India's strategy of gradually diversifying its crude sources. That diversification effort has been underway since well before the current crisis, as Indian refiners have long sought to balance cost, freight and geopolitical risk across their supplier mix — a strategy now being tested by simultaneous disruptions at multiple chokepoints.

September is nevertheless shaping up to be a difficult month for crude buyers. Asian fuel margins remain high and have little visible reason to decline until refinery operations in China, South Korea and other processing centers return to pre-crisis volumes. Continued instability around Middle Eastern maritime chokepoints is simultaneously constraining regional crude supply, forcing buyers to compete more aggressively for barrels offering reliable physical delivery. Russian crude is already trading at parity with dated Brent, or at a small premium to ICE Brent, suggesting that cheap alternatives to Middle Eastern barrels have disappeared. What began as an August decline in Indian imports increasingly resembles the opening stage of a problematic and unstable autumn for oil markets.

Source: OilPrice.com — By Natalia Katona for Oilprice.com