India, the world’s third-largest energy consumer, finds itself at a precarious situation. Its energy security—long dependent on imported crude oil—is now under direct threat from fresh US sanctions targeting Russian oil exports. A bipartisan US Senate Bill, supported by over 80 senators, proposes sweeping secondary sanctions on countries continuing to import Russian energy. These measures, if enacted, would directly impact India’s access to approximately 2 million barrels per day (bpd) of discounted Russian crude—roughly 39% of its total oil imports as of May 2025.
This is no small matter. Russian oil accounted for $50 billion, or 35% of India’s total crude import bill in FY 2024–25. The Urals blend—traded at a $2–$5 per barrel discount to Brent crude—has been the preferred choice for Indian refiners seeking affordable options amid volatile global prices. Even lighter grades like ESPO and Sokol, priced below $60 per barrel, have gained popularity for their blend compatibility and cost-effectiveness.
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Sanctions—a new energy risk
The Senate Bill introduces not only moral suasion but economic muscle. It includes a proposed 500% tariff on nations continuing to import Russian oil—effectively punishing India and China. Indian refiners, especially state-run ones, are reportedly nervous, with banks already tightening financing channels for cargoes transported by so-called “dark fleet” tankers. These are vessels evading global price caps and sanctions, often operating in legal and insurance grey zones.
In May 2025, India’s Russian oil imports slightly dipped to 1.9 million bpd, down from 1.97 million a year earlier—but this was still a 27% rebound from February, when flows briefly stalled due to US pressure. The current geopolitical landscape—marked by intensifying US-Russia hostility, Moscow’s war in Ukraine, and rising oil politicisation—has compounded the problem. With consultations between Washington and allies like Germany, France, and the UK signalling a coordinated Western strategy, India’s room to manoeuvre is shrinking.
Costly alternatives and supply gaps
Iraq, India’s second-largest supplier, delivered 1.08 million bpd in May 2025. Its Basrah grades, at $76 per barrel, offer no substantial savings. Moreover, Iraq’s limited spare capacity makes it a poor substitute for disrupted Russian volumes. West Asian exporters such as Saudi Arabia and the UAE, once dominant players, have been sidelined by the steep discounts on Russian oil. Now, with sanctions looming, a partial pivot back to these sources appears inevitable—but at a price.
India has started to diversify cautiously, seeking volumes from Nigeria, Angola, and Brazil. These nations offer medium and heavy crudes suited to Indian refining configurations. However, building dependable commercial ties and logistics frameworks with these suppliers takes time. Analysts suggest that India should quickly lock in long-term contracts to buffer short-term shocks.
Rebooting domestic capacity
Beyond diplomacy, the more sustainable answer lies within. India must accelerate domestic oil exploration under the Open Acreage Licensing Policy (OALP). Enhanced oil recovery (EOR) technologies must be deployed across aging fields, while public and private investment in refining infrastructure should be encouraged. Upgrading refineries to process a broader range of crude blends would reduce India’s dependence on any one country—Russia included.
Yet progress remains sluggish. Domestic production still covers less than 15% of India’s total crude requirement. Policy reforms to speed up approvals, improve geological surveys, and de-risk exploration investments are overdue. Incentives for companies to modernise refineries and expand processing flexibility should now be central to India’s energy security doctrine.
Green energy—the strategic hedge
In the long term, India must reduce its reliance on imported fossil fuels altogether. Renewables offer a credible path—not only to reduce the carbon footprint but also to insulate the economy from global oil shocks. India, ranked seventh on the Global Climate Risk Index, cannot afford to decouple energy policy from climate resilience.
The International Energy Agency’s Executive Director, Fatih Birol, during a June 2025 meeting with Commerce and Industry Minister Piyush Goyal, reiterated this message. He urged India to fast-track electrification of transport and invest in battery supply chains. India’s FAME-II scheme and its state-level EV policies have laid the groundwork. Now, with global EV penetration surging from 3% to nearly 20% in just four years, India must aim for 30% EV market share by 2030.
Critical minerals and the battery imperative
The EV transition, however, hinges on securing lithium, cobalt, and rare earth minerals—sectors where supply chains remain dangerously concentrated. India’s exploration in Jammu & Kashmir, and efforts to ink mineral access deals with Australia, Chile, and Africa, need to be fast-tracked. The upcoming India-Australia Critical Minerals Partnership, expected to be finalised later this year, could play a key role.
At home, the government must prioritise R&D in battery manufacturing and allocate Production Linked Incentives (PLI) to strengthen localisation. Lessons from successful campaigns—like the LED bulb distribution scheme and the Ujjwala LPG programme—suggest that India can execute large-scale energy transitions if policy intent is matched by on-ground delivery.
The next decade—resilience or risk
Energy security for India is no longer just about securing barrels—it is about managing transitions. The geopolitical stakes of oil imports have risen exponentially. Even as the country navigates short-term disruptions through diplomatic channels and diversified sourcing, its long-term bet must be on reducing the import burden.
India’s economic ambitions—whether it is to become a $5 trillion economy or a global green manufacturing hub—rest on stable, affordable, and clean energy. This means boosting domestic production, refining flexibility, critical mineral access, and renewable deployment—all at once.
The current crisis triggered by US sanctions on Russian oil may serve as a wake-up call. What India does next will determine whether it remains a vulnerable energy guzzler—or evolves into a self-reliant, clean energy powerhouse.