CHENNAI: India, one of the world’s largest oil importers, reportedly faces a major disruption in its crude supply from Russia following fresh US sanctions on two of Russia’s largest oil producers, Rosneft PJSC and Lukoil PJSC. These measures threaten to cut India’s discounted Russian oil imports sharply, possibly to near-zero levels, raising both economic and strategic concerns for the country.
Sector analysts suggest that the sanctions make it extremely difficult for Indian refiners—both private (e.g., Reliance Industries) and state-run (Indian Oil Corporation, Bharat Petroleum)—to continue sourcing crude directly from Rosneft and Lukoil.
Cheaper Russian crude has been a key source of cost relief for Indian refiners. Its sharp reduction may increase input costs, squeezing refining margins and potentially leading to higher domestic fuel prices.
Supply diversification needed: India will likely need to source crude from the Middle East, Africa, or the US, altering traditional trade flows and possibly increasing dependence on other regions.
Continued Russian oil purchases could draw US trade leverage or secondary sanctions, creating diplomatic and economic friction.
Russia accounted for over 30% of India’s crude imports at peak levels, making this a significant risk to the country’s energy security.
Since Russia’s invasion of Ukraine in February 2022, India increased its purchases of Russian crude from minimal levels to roughly 1.7 million barrels per day in early 2025. The U.S. and EU have imposed successive sanctions on Russia’s energy sector, including price caps, bans on certain oil imports, and restrictions on shipping and insurance, to cut Moscow’s revenue from its oil exports.
Fresh US sanctions
On October 22-23, 2025, the US Treasury froze the US-based assets of Rosneft and Lukoil and prohibited all US persons and entities from transacting with these companies. Secondary sanctions extend to foreign banks and intermediaries facilitating such transactions. A compliance deadline for companies is set for November 21, 2025. The sanctions are designed to dramatically reduce Russia’s oil revenues and disrupt global flows of crude from these major producers.
Indian refiners are reviewing contracts and supply chains to comply with sanctions and avoid secondary penalties.
Reduced Indian imports of Russian crude could tighten global supply and put upward pressure on oil prices.
India must balance energy needs with geopolitical considerations, including potential US tariffs or trade measures.
Moscow may redirect volumes to other buyers like China or accept reduced export revenues.
The near-term outlook suggests a sharp reduction in Indian imports of Russian crude. How quickly Indian refiners pivot to alternative suppliers, and at what cost, will be critical for domestic fuel pricing and refining margins. Meanwhile, India must navigate the fine line between securing discounted crude and avoiding geopolitical or trade risks. The coming months will be decisive for both India’s energy strategy and broader global oil market dynamics.
