India’s reliance on discounted Russian crude — a pillar of its energy strategy since 2022 — has come under renewed strain as Washington tightens sanctions and imposes fresh tariffs on Moscow’s energy sector, Carnegie India has said. The shift has already prompted a sharp fall in India’s purchases, exposing both immediate market vulnerabilities and longer-term questions about New Delhi’s geopolitical balancing act.

India, the world’s third-largest consumer of crude oil after the US and China, consumed 265.7mn metric tonnes in 2025, expanding by 3.7% year-on-year (y/y). With domestic production covering only a fraction of demand, the country imports about 89% of its crude — a structural exposure that has magnified the effects of recent sanctions.

According to Carnegie India, before Russia’s invasion of Ukraine in 2022, Moscow supplied just 2.5% of India’s crude imports. But sweeping sanctions from the EU, G7 and US reshaped trade routes across Asia, with Russia diverting supplies to new buyers at steep discounts. By pricing shipments “below the Brent benchmark,” Moscow lured Indian refiners, who realised significant savings over the past three years. As a result, Russian crude subsequently surged to 21.6% of India’s intake in FY22–23, and climbed to roughly 36% in each of the following two fiscal years.

That trajectory shifted abruptly in late 2025, when, on August 27, Washington imposed a 25% duty on India’s Russian oil purchases, supplementing existing reciprocal tariffs of the same rate. This was followed by sanctions on Rosneft, Lukoil and their subsidiaries, announced on October 22, which are due to take effect today – November 21.

US President Donald Trump has repeatedly pledged to halt India’s oil imports from Russia.

The measures target the core of India’s procurement. Rosneft and Lukoil together account for 60% of Russian shipments to India, prompting refiners to pivot towards alternative suppliers. Imports from the US rose to 10.7% in October, up from about 3% in 2024 Carnegie continues. This is a shift partly driven by the “Mission 500” initiative, which aims to lift bilateral trade to $500bn by 2030. The surge also reflects pre-emptive orders after the August tariffs, given the typical 45–55-day shipping window. Any impact of the October sanctions will only emerge in the coming months.

Global markets responded swiftly as US sanctions helped push Brent crude up by about 8%. For India, the price jump could raise annual import costs by $6bn–$7bn. Because of this, domestic refiners, long reliant on discounted Russian barrels, are now braced for a roughly 2% increase in operational expenses.

India’s largest buyer of Russian crude, Reliance Industries, already cut purchases from sanctioned entities by 13% in October while expanding imports from Saudi Arabia and Iraq. Their combined contribution to India’s crude basket rose from 26% in September to 40% in October as India now goes head-to-head with East European nations in sourcing from the Middle East. Mangalore Refinery & Petrochemicals and HPCL-Mittal Energy meanwhile have also similarly outlined plans to halt Russian purchases. Together, the companies represented more than half of India’s Russian crude imports in early 2025.

Some refiners have accelerated, however procurement to beat the sanctions deadline according to Carnegie India, while others seek workarounds via unsanctioned intermediaries. Nayara Energy — operator of India’s second-largest refinery and 49.13% owned by Rosneft — is expected to continue sourcing from restricted entities – at least for now. Indian Oil Corporation, in contrast, is steering towards diversification.

Yet New Delhi continues to hedge between Moscow and Washington. The jump in imports of US crude in October reflects not only commercial considerations, but also a desire to mitigate the risk of secondary sanctions and maintain progress towards the Mission 500 trade target. However, India is unlikely to abruptly curtail Russian purchases. Sanctioned firms represent only 49.2% of Russia’s output, leaving “the remaining 50.8% of unsanctioned Russian crude” available. Moreover, Russian medium-sour crude remains well suited to Indian refinery configurations.

Energy diversification sits at the heart of India’s strategy. As Petroleum Minister Hardeep Singh Puri has emphasised according to Carnegie, “there is an adequate supply and alternative sources of crude oil in the international market even when one supply stream is disrupted.” This mindset has seen Indian refiners increasing procurement from Iraq and the UAE and exploring additional supplies from Latin America — Brazil, Argentina, Colombia and Guyana — as well as West Africa, including Nigeria, Ghana, Togo and Senegal.

For now, New Delhi is prioritising economic resilience over geopolitical alignment. While the US and its allies may succeed in moderating India’s Russian oil purchases in the short term, India’s long-standing commitment to strategic autonomy will continue to shape its energy policy.