Editor: Ananth Suresh
Introduction
India is a country dependent on oil imports which meets 85% of its total requirement. This demand was initially met through imports from the Middle East for decades. Then the war in Ukraine and Western sanctions on Russia rewired the global energy map.
Cut off from Europe, Moscow began selling crude at steep discounts. India moved fast and by 2023, it had become the world’s largest buyer of Russian seaborne oil, taking nearly 1.8 million barrels a day, about one-third of its total imports. Those barrels saved billions and kept inflation in check.
Now, the tide is turning and fresh U.S. and European sanctions on Russia’s major producers are forcing Indian refiners to rethink how and where they buy. Indian refiners will have to look at the bigger picture by focusing on economic stability and the country’s diplomacy rather than finding a bargain for cheap oil.
The Discount Window
When sanctions hit, Russia needed buyers. It offered its Urals crude at ten to fifteen dollars below Brent. India took advantage of this situation, and refiners such as Reliance and Nayara Energy filled storage tanks and export pipelines. Russian crude’s share of India’s imports jumped from under two percent before the war to more than thirty-five percent by mid-2024.
Each dollar saved per barrel trimmed the annual import bill by about two billion dollars. Thus, for a long time, global sanctions worked in India’s favour as cheaper crude helped the government hold fuel taxes steady and eased price pressure for consumers.
Refiners Adjust Course
Late 2025 brought new U.S. and EU sanctions on Rosneft and Lukoil, two Russian oil companies. Indian refiners began to adapt and refiners such as HPCL-Mittal Energy stopped all Russian purchases, but Indian Oil Corporation (IOC) said it would keep buying only from non-sanctioned suppliers. IOC also sought twenty-four million barrels from the Americas for early 2026 delivery. Reliance, India’s biggest refiner, said it would follow government guidance and import from other countries. It can be seen that the discount era is ending, and refiners will be seeing costs and greater risks for every new shipment.
The Macroeconomic Ripple
In 2023, India saved about 2.7 billion dollars in import costs and this cushion narrowed the current-account gap and supported the rupee. With those discounts no longer important, those gains are eroding.
India’s trade deficit reached twenty-seven billion dollars in July 2025. Analysts estimate that a five-dollar rise in oil prices could add ten billion dollars to the import bill.
Refiners are also feeling the shift as profits at IOC and BPCL rose fifteen to twenty percent in FY 2024–25 but replacing cheap Russian barrels with higher-cost U.S. or West African grades may reduce margins and exports as customers will not be inclined to purchase expensive refined oil.
Payments and Shipping
Oil trade is as much about finance as fuel. Since 2023, India has experimented with rupee-dirham and Rupee-Ruble payments to avoid dollar exposure. However, recently the Russian Deputy Prime Minister Alexander Novak has also claimed that India has started paying for its oil imports from Russia in Yuan in additional to Rubles following reports of requests from Russian oil traders to replace trading in Dirhams or the US dollar with the Chinese Yuan.
Shipping adds its own tension. Many Russian cargoes now move on a so-called shadow fleet of aging tankers with unclear ownership and insurance, implying higher risk which could disrupt supply if an accident happens with a shipment and would cost heavily.
Between Blocs
India is currently sitting between two competing powers, Russia and the USA. While Russia wants to increase energy corporation between India and China while calling India a reliable partner, the USA has argued that the discounted oil funds Russia’s war efforts in Ukraine and has always assumed a stance calling on India to reduce oil imports from Russia.
India has a stated position where it says that it recognizes only U.N. sanctions and that unilateral sanctions is not considered. By showing enough compliance to satisfy the West while still retaining Moscow’s goodwill, India has managed to keep its relationships stable and oil supply flowing until now.
Beyond Oil
The government is looking beyond the current situation at hand and has invested heavily in renewable energy. According to a press release by PIB, 50% of total installed electricity generation in India is from non-fossil fuel sources. Additionally, the National Hydrogen Mission targets 5 million tonnes of green hydrogen by 2030. While this is beneficial in the long term, fossil fuel will still be relevant in the current decade.
Thus, the near-term goal would be to maintain stability through diverse sources, secure logistics, and strong compliance while the long-term aim should be at becoming self-reliant in energy production and lesser external shocks.
Conclusion
India’s energy story since 2022 shows how flexibility beats force. It turned sanctions into savings, then learned to navigate the fallout. Refiners that once chased cheap cargoes now weigh legality, logistics, and diplomacy. Adding to this, India must keep energy affordable, avoid sanction traps, and push toward cleaner power. The Russian discount dividend may be fading, yet a new dividend is emerging in credibility and control. The oil compass no longer points only to cheap barrels. It points to self-reliance and a steadier place in the world economy.
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