India’s energy landscape continues to evolve as geopolitical tensions reshape global oil markets. Recent data reveals a notable 8.4% decline in Russian oil imports during April-September 2025, marking a significant shift in the world’s third-largest oil consumer’s procurement strategy.[1] Yet beneath these statistics lies a complex narrative of economic pragmatism, diplomatic pressures, and strategic energy planning.
Analyzing the Numbers
Indian refiners imported 1.75 million barrels per day of Russian crude during the first half of fiscal year 2025-26, down from previous highs but still maintaining Russia’s position as India’s largest oil supplier. September’s volumes remained flat at 1.6 million barrels per day compared to August, though representing a 14.2% drop from the same period last year.[2]
This decline hasn’t occurred uniformly across India’s refining sector. While state-owned companies slashed Russian imports by a substantial 45% between June and September, private giants like Reliance Industries and Nayara Energy significantly increased their purchases. Reliance alone doubled its Russian crude intake to 850,000 barrels per day, while Nayara Energy recorded its highest imports of the year at nearly 400,000 barrels per day in October.[3]
US-India Energy Diplomacy
The backdrop to these shifting import patterns is unprecedented American pressure on New Delhi. The Trump administration has implemented a dual-pronged approach: economic coercion through tariffs and diplomatic engagement through trade negotiations. Indian goods now face 50% additional tariffs, with an explicit 25% penalty targeting Russian oil purchases.[4]
The message is clear, reducing Russian oil imports is a prerequisite for any favorable trade agreement between the world’s two largest democracies.
Economic Pragmatism Prevails
Despite mounting pressure, India’s approach remains fundamentally economic. Analysis of trade data reveals that India has saved approximately $12.6 billion over 39 months through discounted Russian oil purchases. While some estimates suggest savings could be as high as $26 billion, even conservative calculations demonstrate significant economic benefits.[5]
Finance Minister has maintained that purchases are decision based on rates and logistics, while External Affairs Minister has criticized American tariffs as unfair and unreasonable. This position reflects India’s broader energy security concerns, where every dollar saved on oil imports translates directly to foreign exchange conservation and inflation management.
The discount dynamics have evolved considerably. In fiscal 2022-23, Russian crude averaged $13 below other suppliers, providing a 13.6% discount. By 2024-25, this narrowed to just 2.8%, reflecting tighter global supplies and increased competition for Russian barrels. Ukrainian drone strikes on Russian refineries have further constrained supply, reducing the discount to approximately $2-3 per barrel below Brent benchmarks.[5]
Diversification: The Strategic Response
India’s response to these challenges demonstrates sophisticated energy diplomacy. The country has simultaneously increased imports from the United States by 6.8% to 213,000 barrels per day while expanding procurement from Middle Eastern suppliers. The share of Middle Eastern oil rose from 42% to 45% of total imports, while OPEC nations’ overall share increased from 45% to 49%.[6]
This diversification strategy serves multiple purposes. It provides operational flexibility, reduces dependence on any single supplier, and offers diplomatic leverage in negotiations with various partners. State-owned refiners have initiated discussions with Middle Eastern and African national oil companies for term agreements in 2026, indicating long-term strategic planning beyond immediate price considerations.
Global Context: Surplus and Uncertainty
India’s oil procurement decisions occur within a global market experiencing significant oversupply. The International Energy Agency projects global oil supply could reach 106.9 million barrels per day in 2025, potentially creating a surplus of up to 4 million barrels daily. This oversupply, driven by increased production from non-OPEC countries including the United States, Brazil, and Guyana, could provide India with greater procurement flexibility.
However, geopolitical risks remain substantial. Potential supply disruptions from increased sanctions on Russia or Iran could dramatically alter market dynamics. Goldman Sachs Research suggests that a million-barrel-per-day drop in Iranian supply could push Brent crude to the mid-$80s per barrel, fundamentally changing the economics of India’s import strategy.[7]
The Road Ahead: Balancing Act Continues
Looking forward, India’s energy strategy will likely maintain its pragmatic foundation while adapting to evolving circumstances. The government’s commitment to achieving 500 GW of non-fossil fuel capacity by 2030 provides a long-term framework for reducing oil dependence.[8] Simultaneously, immediate needs require continued diversification and strategic procurement.
Industry analysts expect Russian oil to remain economically attractive for Indian refiners, particularly given their high gross product margins and existing infrastructure advantages. However, the narrowing discount spread and diplomatic pressures will likely sustain the current trend toward greater supply diversification.
The festive season demand surge during October-December may temporarily boost overall imports, but the fundamental shift toward a more balanced supply portfolio appears sustainable. India’s energy game continues, with each move carefully calculated to balance economic benefits, diplomatic relationships, and long-term strategic objectives. The country’s ability to navigate these competing pressures while maintaining energy security will remain crucial for its economic growth and regional influence.
References
- Economic Times – “India’s Russian oil imports in April-Sept fell 8.4% Y/Y, data shows” (October 13, 2025)
- India Today – “Defiant India keeps Russia its top oil source” (October 14, 2025)
- Times of India – “Discounts double! Indian refiners to step up Russia crude oil imports” (October 8, 2025)
- Reuters – “US tells India that Russian oil curbs are key to trade deal progress” (September 26, 2025)
- Indian Express – “Moscow’s oil helped India save $12.6 billion in 39 months” (September 1, 2025)
- New Indian Express – “India’s oil imports: Soaring energy demand tied to geopolitics” (August 13, 2025)
- Goldman Sachs Research – “How geopolitics will ripple through oil prices in 2025” (January 8, 2025)
- International Energy Agency – “Oil Market Monthly Report” (September 2025)
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