India: How Russian Oil Imports Challenge the West

India's reliance on Russian energy has grown significantly since 2022, when Western sanctions forced Moscow to shift its oil trade eastward. Given discounts for crude by indigenous Russian producers, often anywhere from $8–12 per barrel from Brent benchmarks, Russian crude has been attractive for Indian refiners looking to deliver barrels amid the soaring demand for product, as shown in 2023, where Russia overtook Iraq and Saudi Arabia as India's largest supplier of oil. Although some Indian oil imports tapered in early 2025, with Washington recently aсquired the actual notion of sanctioning India, the new contracts signed this month by Indian Oil Corp. and Bharat Petroleum confirm they are returning to business as normal.

The ruling illustrates the balancing act New Delhi is trying to strike on energy security and foreign policy alignment. India is import reliant on crude oil with more than 85 percent of its crude requirement being imported and considerable sensitivity to global price fluctuations making it extremely vulnerable. The stability and savings of Russian cargoes have helped the government keep a lid on fuel prices in a context still dealing with inflation being politically sensitive. New Delhi officials argue that India's energy trade is a matter of sovereign choice and that its Western partners ought to respect India's developmental priorities.

Washington and Brussels see the renewed purchases as a tidal wave of noncompliance with the sanctions regime imposed in response to Russia's invasion of Ukraine. American officials argue that dollars flowing from Indian refiners are vital revenue lines to the Kremlin, and help sustain Russia's war effort. At a recent press briefing, a senior State Department official noted, "the continued large-scale imports of Russian energy by India runs the risk of undercutting the effectiveness of international sanctions, and undermined the credibility to commit as a strategic partner." Similar sentiments resonate with European politicians, but there remains a divide among European geopolitical interests. Germany and some Eastern European states want a more aggressive approach, while France and Italy are going slow for fear of riling New Delhi at a time when they want to deepen their defense and technology partnership with India.

The situation in Washington has shown clear splits. Some lawmakers want to move rapidly on secondary sanctions on Indian refiners and shipping companies, replicating sanctions from earlier this year that targeted Chinese intermediaries. Others would rather go slower, advising that further isolating the world’s largest democracy could bring New Delhi closer to Moscow and Beijing. Trump moved back and forth, alternating between publicly warning and communicating privately, while aware of India’s role in the U.S. Indo-Pacific strategy.

The marketplace reacted swiftly to the news that India had revived contracts. On August 20, Brent crude oil prices increased about 3% after a Bloomberg news article cited that India had been importing and buying heavy discounted crude, and was also viewed as tighter western enforcement in terms of Indian demand for discounted crude oil, recently deemed strong. Speculation by traders is that prices are going to be volatile for a period of time, especially if Washington lays on new penalties on tankers, insurers, or financial institutions from further India-Russia business. India's re-entry into the market is something Moscow views as an important lifeblood. With almost zero European imports and Chinese values now stagnating, Indian refiners are one of the few remaining large outlets left for Urals crude oil. Analyst reports suggest shipments to India in September and October will generate greater than $4 billion for the Kremlin.

The geopolitical implications go far beyond energy flows. In South Asia, India's access to favorite-priced crude from Russia has created gaps with neighboring countries such as Pakistan and Sri Lanka that still depend on Gulf suppliers at higher costs. Regional tensions have sometimes emerged in OPEC+ negotiations among Gulf producers, especially Saudi producers, because of India's decisions to buy barrels from Russia.

Meanwhile, India is also strengthening cooperation with Western allies in other areas. Defense cooperation with the United States has deepened (to include recent joint naval exercises conducted in the Indian Ocean). The European Union has fast-tracked negotiations over a free trade agreement (with New Delhi) and sees India as an important counter to Chinese power in Asia, among several other factors. These simultaneous developments encapsulate the difficulty of sanctioning a partner that Western governments also see as a separate and indispensable partner.

Public opinion in India strongly supports continued purchases of discounted crude oil from Russia. These imports are critical to economic stability and inflation containment because, while fuel prices thoroughly impact transportation, agriculture and the household budget, these imports will create difficult choices. Political observers are indicating the Modi government will not want to risk losing this energy supply, especially given public support and economic considerations. New Delhi can say it is fulfilling its international obligations (including the price cap), and say to the West it should be focusing on limiting Russia's financial infrastructure, rather than targeting appropriate Indian importers.

Looking forward, sanctions on India may provide a test of the durability of U.S.-India relations. Some experts suggest Washington would embrace a variety of symbolic sanctions (e.g., blacklisting smaller shipping companies or tightening reporting requirements) but avoid sweeping sanctions that would effectively sever relations altogether. Others caution that even modest sanctions would still elicit a nationalist backlash that would hinder collaboration on issues ranging from semiconductor supply chains to regional security in the Indo-Pacific.

The dispute also poses larger questions about the future of the global energy order.

If a major importer like India is ready to defy all Western pressures, the validity of sanctions as a policy tool may be called into question. As long as alternative markets absorb Russian output, Moscow’s ability to absorb economic isolation may exceed expectations. In turn, Washington and Brussels may have to consider, and adopt, a measured approach to sanctions that include diplomatic overtures as well.

In the meantime, India’s shopping spree demonstrates the limits of Western leverage. Energy security remains the dominant priority for New Delhi, even if it means friction with partners. The approach taken by the United States and European Union, whether confrontation or accommodation, will shape not only the path of their relations with India but also, more broadly, the legitimacy of sanctions as a tool of geopolitical strategy.