Indian Refiners Lock October and November Crude as Rystad Cuts Russia Output Forecast
Rystad Energy's downward revision to 8.95 million bpd for Russian crude production in 2026 is pushing Indian state refiners into the spot market months ahead of schedule.
Indian state-owned refiners are buying crude unusually far in advance, a sign of how badly Ukrainian strikes on Russian energy infrastructure have scrambled supply planning. Hindustan Petroleum Corp. bought roughly 4 million barrels of Middle Eastern crude for October delivery — cargoes specifically chosen to avoid Hormuz passage — while Mangalore Refinery & Petrochemicals booked West African oil for the same month, according to people familiar with the matter. Indian Oil Corp. and HPCL have already secured supplies through October and are now seeking cargoes for November.5
Behind the rush sits a deteriorating Russian production picture. Rystad Energy has revised its Russian crude output forecast to an average of 8.95 million barrels per day for 2026, with a further decline to around 8.6 million bpd in 2027 — reductions driven by a combination of tighter sanctions and Ukrainian drone and missile attacks on refineries, ports and tankers that have compounded through the second half of the year.6
The downstream damage is severe in its own right. Russian refinery runs in June and July were among the lowest recorded in two decades, and Rystad forecasts throughput will average around 4 million bpd between July and December — almost 30% below the 2016-2023 seasonal average of roughly 5.7 million bpd. Russia will process around 1.4 million bpd less crude in the second half than historical seasonal patterns would suggest.6
For India, the timing is uncomfortable. Russia's share of Indian oil imports had already slipped from a peak of around 44% to roughly 25% by February 2026, as the Economist reported, and refiners scrambled to fill the gap through Venezuelan barrels secured under U.S. licences and spot purchases from other suppliers. India managed to replace less than two-thirds of the supply lost from Russia. Probal Sen of ICICI Securities estimated that for each month the disruption continues, the industry's earnings fall at an annualised rate of 12 to 15%.3
Indian demand is also growing structurally. Refinery expansions expected to add more than 500,000 barrels of daily processing capacity this year will further increase procurement requirements, pulling additional volumes into a market already stretched by supply uncertainty on two fronts: Russia and the Strait of Hormuz standoff.5
The shift in Russia's export geography has been building for years but is now under additional strain. EIA data show that India accounted for 34% of Russia's crude oil exports in 2024, up from 30% in 2023, making it Russia's single largest crude customer. China, by contrast, fell to 26% in 2024 from 32% the prior year. Whether China steps back in to absorb more Russian barrels — particularly through the ESPO pipeline — or continues to pull back shapes the clearing price for discounted Russian crude across Asia.2
Russia's broader energy export base has eroded in parallel. EU natural gas imports from Russia fell by more than two-thirds from 2020 levels, according to EIA data. Coal exports to Europe fell to just 13% of Russia's total by 2024 from 32% in 2020, with almost all remaining volumes going to Türkiye. Asia and Oceania now absorb 85% of Russia's coal and 63% of its crude. The concentration of buyers has reduced Russia's ability to play markets against each other.1,2
There is a divergence in the data worth scrutinising. Rystad's output figure of 8.95 million bpd for 2026 sits against ICE Brent crude front-month prices of $88.82 per barrel as of the August 16 data stamp — a reading that suggests markets are pricing in meaningful supply tightening but not a full collapse. Urals crude was quoted at $84.08 per barrel in the same data, a discount of roughly $4.74 to Brent. How far that spread widens as production slides further tells you how much pain Russia's fiscal position absorbs relative to its buyers.6
The Energy Voice reported that Russia has increasingly shifted crude exports toward northern sea routes as Black Sea shipping comes under attack, adding logistical cost and delivery uncertainty to an already strained system. Russia has imported some petroleum products from India and Belarus to partially offset domestic shortages, a reversal that would have been unimaginable before 2022.4
For traders, the forward signal is in India's November buying. State refiners locking supplies that far out — longer than their typical procurement horizon — implies they expect the Russian supply shortfall and the Hormuz uncertainty to persist through Q4. How aggressively HPCL and IOC extend that forward cover into early 2027, and at what price they find willing sellers, tests how elastic the non-Russian crude market is at current demand levels.5