Delhi hedges its bets by diversifying oil supplies

Given the uncertainty introduced by US sanctions, which require American and non-American refineries to stop buying Russian oil by Nov 21 or face restrictions on financing and licences, countries like India are beginning to explore other sources.

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Ms Hari said India would not struggle to diversify its crude sources. The only question is the cost at which Russian and other alternative sources of crude would be purchased.

India has been buying discounted crude oil from Russia, but US sanctions have already eroded the advantage and raised global crude prices, said analysts.

"The arbitrage that Russian oil offered during the energy crisis has tapered off, and there is no need for India now to have significant purchases of Russian oil," Natixis' senior economist Trinh Nguyen told CNBC on Oct 24.

Shipping and trade data shows that between April and September, India's Russian oil purchases declined by 8.4 per cent year on year, owing to reduced discounts and limited supplies. Refiners gradually increased their imports from the Middle East and the US.

However, the prices of alternative sources of crude have also risen, with the broader supply crimped by the latest US sanctions on Russian oil supplies.