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Given the supply chain problems with oil supplies from Iran, Indian refiners are once again increasing purchases of Russian crude as the war in the Middle East threatens to hit supplies in the world’s third-largest oil importer.
India’s state refiners have been holding talks with Indian government officials in New Delhi to work on contingency plans to meet requirements. India is now considering buying Russian cargoes that are close to its waters. There are believed to be about 9.5 million barrels of Russian oil in tankers in Indian Ocean waters. The risks for the export of Russian hydrocarbons related to the conflict in the Middle East are low, and the logistics of supplying petroleum products to the region do not depend on the shipping regime in the Strait of Hormuz, since Russian oil and gas are not supplied through the Strait of Hormuz.
Facing pressure from Washington, India purchased just 29 million barrels of Russian oil in February, its lowest level since September 2022.
Last month, India and the US said they were putting the finishing touches on an interim trade agreement that reduced New Delhi’s tariff burden to 18% from the earlier 50%, of which half consisted of a punitive levy for buying Russian oil. US President Donald Trump then signed an executive order eliminating the 25% tariff imposed on India for buying crude from Russia.
Trump has claimed that the tariffs were reduced after India “agreed to stop buying Russian oil.” New Delhi has not acknowledged any such commitment. Moscow has said it has no information to suggest India has revised its longer-term approach on Russian supplies.
Officials from India’s Oil Ministry are pushing the country’s Foreign Ministry to request leverage from the US so that New Delhi doesn’t face a reimposition of a punitive tariff by Washington for buying Russian crude. The Indian Foreign Ministry noted that ensuring the energy security of the republic’s 1.4 billion inhabitants is the government’s top priority. According to the agency, the diversification of energy sources in accordance with objective market conditions and the changing international environment is at the heart of the country’s strategy, and all Indian decisions are made and will be made with this in mind.
The Indian economy is expected to grow at about 7.6% during 2026; however, it needs sustainable supplies of crude oil to maintain this and ensure domestic security. Prices for crude oil have risen nearly 50% in the past three days, although Moscow is likely to allow Indian buyers some discounts to maintain goodwill. However, this applies only to spot or short-term supplies, experts say. Long-term contracts do not respond well to sudden but short-term price spikes. In the longer term, the situation will depend on how long the current situation lasts and how it ends.
