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The HinduJuly 13, 2026

Oil conundrum: On India’s energy imports from Russia

Union Ministry of Commerce and Industry (MCI) data on India’s May crude imports show that receipts from Russia had reached the pre-sanction levels of more than 40%, which is also the highest in two years. Though India has defended this as commercially prudent, its yuan-based payments give China an edge to internationalise its currency at India’s expense, even if it has no bearing on the domestic strength of the Indian rupee due to strict capital controls. Oil import concentration from a single source, and paying a premium, is risky for India, which has long pursued a diversified energy strategy. Moreover, sourcing fuel from the Gulf spot market amid evolving sanctions has its own risks. Secondary sanctions could hit trade channels, exposing Indian refiners to severe supply shocks. India’s crude imports from Russia surged in June, while UAE shipments were at record levels as refiners sought to secure supplies after the Strait of Hormuz reopened. However, renewed Iran-U.S. hostilities have put those flows at risk. And even as Venezuela has emerged as a key supplier, increasing and unsustainably high one-country concentration could weaken India’s bargaining power, reduce flexibility, and erode its credibility as an independent balancing power. MCI data highlight the price impact: Russian imports carried a $46-per-ton premium. Import value surged 83% amid a 2% fall in volume, likely diminishing Indian refiners’ margins on refined products using Russian crude. While spot purchases have enabled refiners to capture discounts of up to $10 per barrel on Russian Urals crude relative to Brent during some periods, after February this year, narrowing discounts, weaker product cracks, and geopolitical risks have moderated gross refining margins. India must strike a balance between having long-term stable contracts with multiple producers, and selectively using the spot-market to mitigate the procurement risks. Until the Russia-Ukraine conflict, nearly 70% of India’s crude imports came through long-term contracts, particularly from West Asia. True, India cannot overlook the diplomatic costs as Russian energy dependence risks sanctions. When Russian crude was cheap because of discounts on account of the Ukraine war, India reduced imports under U.S. pressure; now when it is being sold at a premium because of the Iran war, India is moving back to Russian crude. India must expand its strategic petroleum reserves to cushion temporary disruptions. Whether it increases or cuts down Russian oil imports, India seems to make decisions that are far removed from any sense of strategic autonomy. Published - July 13, 2026 12:20 am IST Read Comments Copy link Email Facebook Twitter Telegram LinkedIn WhatsApp Reddit READ LATER SEE ALL Remove Related Topics ministers (government) / India / oil and gas - upstream activities / Russia / economic sanction / China / currency values / United Arab Emirates / Israel-US strikes on Iran / U.S. action on Venezuela / Venezuela / Saudi Arabia / imports / Russia-Ukraine Crisis / West Asia / USA / energy and resource

Key GK Takeaways for CLAT
  • 1India's energy sourcing decisions sit at the intersection of executive economic policy and constitutional federalism, since petroleum imports fall under the Union government's exclusive domain via Entry 53 of the Union List, covering regulation of oilfields and mineral development. The Ministry of Commerce and Industry and Ministry of Petroleum jointly shape import policy without state government involvement, concentrating strategic energy decisions at the Centre. This centralised control allows swift policy shifts but also means diplomatic and economic risks from oil dependence are borne nationally rather than distributed.
  • 2The editorial's concern about eroding 'strategic autonomy' echoes India's post-Cold War foreign policy doctrine of multi-alignment, balancing ties with Russia, the US, and Gulf states simultaneously. This is comparable to India's stance during the 2022 Russia-Ukraine war, when it abstained from UN Security Council resolutions condemning Russia while still importing discounted crude, drawing criticism from Western allies. The Iran-US hostilities adding fresh volatility to Gulf supply chains further illustrates how India's energy security is hostage to conflicts far beyond its control, testing the limits of non-alignment in practice.
  • 3US secondary sanctions on Russian oil trade are enforced primarily through the Treasury's Office of Foreign Assets Control (OFAC), which can blacklist foreign banks, shippers, and refiners dealing with sanctioned Russian entities, as seen when OFAC sanctioned Sovcomflot-linked tankers in 2024. Indian refiners like Reliance and state-run IOC have had to navigate compliance carefully to avoid being cut off from the dollar-based financial system. Any tightening of this sanctions regime could force sudden re-routing of Indian crude sourcing, with legal and financial consequences for domestic refiners.
  • 4India's crude import bill is economically significant: the country imports roughly 85 percent of its crude oil needs, making it the third-largest oil importer in the world after China and the United States. The editorial's cited $46-per-ton premium on Russian crude, alongside an 83 percent surge in import value against just a 2 percent rise in volume, signals shrinking refining margins that could pressure fuel pricing and inflation. With India's strategic petroleum reserve holding only about 5.33 million tonnes, roughly nine to ten days of national consumption, the buffer against sudden global price shocks remains thin.

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