India’s dependence on Russian oil has become a fresh point of friction with Washington. The United States is pressing countries that continue to buy Russian energy, while India depends on imports for nearly 90% of its crude consumption. The immediate question is whether New Delhi can continue buying Russian barrels without exposing its exports to punitive US action. The larger question is harder: if Russian supplies become difficult to access, how much will it cost India to replace them?
The issue became more serious on September 18, when President Donald Trump signed the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026 into law. The legislation gives the US president authority to impose tariffs of up to 100% on countries that buy Russian oil and gas. It does not automatically impose a 100% tariff on India. The discretion given to the White House is itself the source of uncertainty for Indian policymakers, particularly as trade negotiations between the two countries continue.
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The pressure comes at a difficult moment for the oil market. Since Russia invaded Ukraine in 2022, Western sanctions have reduced Moscow’s access to its traditional European customers, prompting Russian producers to redirect crude to Asia, often at attractive prices. Indian refiners responded quickly. Russian crude, once a marginal part of India’s import basket, became its largest source. The arrangement was commercially useful for Indian refiners and helped keep Russian barrels in the international market at a time when removing them altogether could have caused a sharper supply shock.
Russian oil has become a large part of India’s import basket
The scale of the dependence has increased sharply this year. Russian crude accounted for 50.83% of India’s oil imports in July, or about 2.47 million barrels a day, according to Reuters data. Between April and July, Russia’s average share was 43.25%, compared with 37% a year earlier. The shift has coincided with disruptions to supplies from West Asia, which made Russian barrels more attractive to Indian refiners.
That concentration creates a problem even if Washington never imposes the maximum tariff. Oil procurement is a commercial decision involving crude quality, freight, insurance, payment arrangements and refinery economics. Indian refiners have built procurement systems around particular crude grades, and Russian supplies cannot always be replaced barrel for barrel with another source.
The government has also maintained that Indian refiners make crude purchases on commercial and techno-economic considerations, while encouraging diversification of supply. The Ministry of Petroleum and Natural Gas identifies geographical diversification and uninterrupted crude supplies as core elements of India’s energy diplomacy.
That distinction matters. The choice facing India is not simply between buying Russian oil and obeying American pressure. It is between different combinations of price, availability, refinery compatibility, freight costs and geopolitical risk.
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Replacing Russian crude is not a simple switch
The argument that India can simply buy its oil elsewhere underestimates the structure of the refining business. Crude grades differ in sulphur content, density and other characteristics, and refineries are configured to process particular combinations of crude. Changing the mix is possible, but it can involve changes in refinery operations, freight arrangements and procurement costs.
There are alternatives. India can buy more from Iraq, Saudi Arabia, the UAE, the United States, Africa and Latin America. Indeed, the country has been adding suppliers. But diversification does not create unlimited supply. Other large importers compete for the same barrels, while geopolitical disruptions can affect several suppliers at the same time.
The experience of 2026 illustrates the point. Middle Eastern supply disruptions pushed Indian refiners towards Russian crude, while competition from Chinese refiners and tighter Russian availability contributed to a fall in Russian imports in August. The share of Russian crude in India’s imports fell to about 45% that month from 55.9% in July, according to provisional tanker data reported by the Indian Express.
This is why replacing Russian oil should not be confused with diversifying India’s oil basket. Diversification is a gradual process. A sudden loss of a major supplier is a supply shock.
An oil shock would spread through the economy
The economic consequences would extend well beyond the oil companies. India’s crude import bill is highly sensitive to international prices. A sustained increase in crude costs can widen pressure on the current account, raise transport and logistics costs and feed into inflation. The Finance Ministry has already warned that a prolonged rise in crude prices could put pressure on the fiscal and current-account positions.
The government has some room to absorb an oil shock through taxes, subsidies or other fiscal measures. But that room is not unlimited. Lower fuel taxes reduce government revenue; subsidies increase expenditure. Higher retail prices pass the cost to households and businesses. None of these options makes the underlying crude more affordable.
The vulnerability is greater because the global oil market itself is under strain. West Asian conflict has disrupted established supply routes, while freight and insurance costs have risen. India cannot assume that the barrels displaced from Russia will automatically be available elsewhere at the same price.
This is also why the argument that sanctions will necessarily reduce Russia’s oil earnings needs qualification. Russian crude that leaves one market can be redirected to another. If global supply tightens as a result, prices can rise enough to offset part of the loss in Russian export volumes. Reuters has reported similar concerns among oil traders, who warn that restricting Russian supplies while Middle Eastern supplies are already disrupted could push global prices higher.
That does not invalidate the US objective of reducing Russian energy revenues. It does, however, underline the difficulty of using sanctions against a commodity traded in a global market. The effects do not stop at the intended target.
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India needs diversification without an artificial deadline
None of this makes Russian oil permanently indispensable. A sourcing strategy that becomes excessively dependent on one country creates its own vulnerability. The lesson from the past four years is that India benefits when refiners have several commercially viable options.
The sensible objective, therefore, is not to maximise Russian purchases indefinitely or to abandon them abruptly. It is to preserve the ability to buy from Russia, the Middle East, Africa, Latin America, the United States and other suppliers when price, availability and geopolitical risk make those sources viable.
That requires more than diplomatic bargaining. Refinery flexibility needs to improve so that plants can process a wider range of crude. Strategic petroleum reserves need to provide a larger buffer against temporary disruptions. Long-term supply contracts can reduce exposure to spot-market volatility, while investment in renewables and electric mobility can gradually reduce the economy’s dependence on imported oil.
India’s energy policy has to account for the fact that oil is both a commodity and a strategic vulnerability. The official position is that energy security for India’s 1.4 billion people requires diversified sourcing based on market conditions.
The US has legitimate reasons for trying to reduce the revenues available to Russia. India has equally strong reasons to protect the affordability and continuity of its energy supplies. The two objectives can collide without either side intending to create a global oil shock.
That is the central lesson of the new US sanctions law. India’s problem cannot be solved by choosing between Washington and Moscow. It can only be reduced by making the country less vulnerable to the loss of any one source of crude, and by ensuring that geopolitical pressure does not become a substitute for an energy-security strategy.