Big Test in Exchange for Cheap Oil: How Crucial Is Russian Oil for India?

India is facing growing pressure from the United States to reduce its dependence on Russian oil, raising questions about the long-term sustainability of its energy policy. The issue has put New Delhi in a tight spot between old ally Moscow and strategic partner Washington.

The U.S. first imposed tariffs in August, introducing a 50% duty on Indian goods linked to Russian oil imports. President Donald Trump recently claimed that Prime Minister Narendra Modi had agreed to end these purchases “in the short term,” although Indian officials have denied any such commitment.

Russia, meanwhile, expressed cautious optimism. “Their oil is very beneficial for the Indian economy and the welfare of its people,” said Denis Alifov, Russia’s ambassador to New Delhi.

India’s Ministry of Petroleum and Natural Gas reiterated that its oil import policy remains aligned with the country’s energy security and consumer interests. “We act in accordance with national priorities in an unpredictable global energy landscape,” a spokesperson said, dismissing reports of any talks between Modi and Trump.

A Delicate Balancing Act

India, the world’s third-largest oil importer, purchased about $52.7 billion worth of Russian crude last year, accounting for 37% of its total oil imports. Major suppliers also include Iraq, Saudi Arabia, the UAE, Nigeria, and the U.S.

According to the Global Trade Research Initiative (GTRI), India also imported $7.7 billion in petroleum products from the U.S. in 2024, including $4.8 billion in crude oil, though it still recorded a $3.2 billion petroleum trade deficit with Washington.

Between 2018 and 2022, India phased out imports from sanctioned countries such as Iran and Venezuela, turning to traditional suppliers like Iraq and Saudi Arabia. But after the Ukraine war, the landscape shifted dramatically. Russian oil imports skyrocketed from 4 million tons in 2021–22 to over 87 million tons in 2024–25, driven by steep discounts offered by Moscow following Western sanctions.

Economic Benefits and Risks

These discounts—averaging 10–14% below global prices—saved India about $5 billion annually, equivalent to three to four percent of its total crude import bill. Although modest compared to India’s $900 billion import expenditure, the discounted oil has provided much-needed stability to domestic refineries and fuel prices.

Experts say India’s refineries, designed for heavier crude like Russia’s Urals blend, would struggle to switch to lighter U.S. shale oil without costly modifications. “Russian oil ensures both price stability and refinery compatibility,” says Ajay Shrivastava, head of GTRI.

If India halts Russian oil imports, analysts warn that global prices could surge, erasing the economic gains and increasing costs worldwide.

As geopolitical tensions grow, India’s energy policy remains a balancing act — maintaining affordable oil supplies while managing international diplomatic pressure. For now, Russian crude continues to play a vital role in fueling India’s economy.