New Delhi: US President Donald Trump’s recent sanctions on Russian oil giants Lukoil and Rosneft are pushing India to reconsider its energy strategy. The measures, announced last week, indicate that Indian oil refineries, along with banks and shipping companies facilitating business with these blacklisted Russian companies, could face secondary sanctions if they do not wind down transactions by a November 21 deadline.
According to Deutsche Welle, the Trump administration had previously announced in August a 50% tariff on a selection of Indian exports to the US due to New Delhi’s continued purchases of Russian oil. In September, India imported approximately 1.6 million barrels of Russian crude daily, as reported by global trade analytics firm Kpler. Meera Shankar, a former Indian ambassador to the US, noted that the sanctions specifically target large Russian energy companies rather than Russian oil itself, suggesting that a complete removal of Russian oil from the global market would lead to undesirable energy price hikes.
Reliance Industries, India’s largest importer of Russian crude, has indicated plans to phase out purchases from Rosneft. Several refinery sources told Reuters that Reliance is assessing the implications of the Western restrictions. The company has stated its intention to adapt refinery operations to comply with applicable sanctions and regulatory frameworks, including new EU guidelines on importing Russia-sourced refined petroleum products. Reliance also emphasized its commitment to adhere to any guidance from the Indian government.
The geopolitical tensions escalated following Russia’s invasion of Ukraine in 2022, which led India to purchase Russian crude oil at discounted rates, making Russia India’s largest crude oil supplier. Prior to the conflict, India primarily sourced its oil from the Middle East. The imports of cheaper Russian oil have been economically beneficial for India, saving billions, yet they have drawn criticism for indirectly supporting Russia’s war efforts. The US Treasury has stated that the sanctions aim to undermine the Kremlin’s ability to fund its military operations.
India faces a critical decision on whether Russian oil is worth risking secondary sanctions and a potential trade deal with the US. Arun Kumar, an economics expert from Delhi’s Jawaharlal Nehru University, argued that India may have no choice but to comply with US sanctions, citing past instances where India ceased oil imports from Iran and Venezuela under US pressure.
Lekha Chakraborty, from the National Institute of Public Finance and Policy, highlighted that Indian refiners are already pivoting towards Middle Eastern oil supplies to replace Russian crude. This realignment includes a surge in imports from Iraq, Saudi Arabia, and the UAE. However, this shift could result in higher fuel prices, potentially impacting India’s targeted 7% economic growth.
Ajay Bisaria, a former Indian diplomat, emphasized India’s strategic autonomy in energy policy, asserting that the country aims to maintain flexibility and secure affordable oil for its consumers. He noted that while India is not ruling out Russian oil imports in the future, current US sanctions create significant challenges for Indian companies. Nevertheless, the Indian government avoids explicitly directing firms to cease Russian imports, preserving strategic flexibility.
As negotiations for an India-US trade agreement continue, halting Russian oil imports could provide diplomatic leverage, allowing India to resume Russian oil purchases when conditions improve. Indian analysts predict a short-term decline in Russian crude imports, with refineries potentially sourcing through third-party intermediaries, though the scale and timing remain uncertain.