India Prioritizes Cheap Oil Over U.S. Pressure in Geopolitical Gamble

Russia confirmed it will continue supplying oil to India despite Western sanctions, as shown by recent developments in the India-Russia energy trade. Despite a notable dip in July, Russian oil imports into India remain a critical component of the country's energy strategy. In July, India's Russian oil imports fell by 24.5% compared to June, averaging 1.5 million barrels per day, according to trade sources and data. The decline was attributed to narrower discounts on Urals crude, prompting some refiners to slow purchases during the monsoon season, when fuel demand typically dips [1]. This drop, however, does not signal a halt in the long-term trend of Indian refiners turning to Russian oil amid geopolitical tensions and pricing advantages.

Private refiners, including Reliance Industries, Nayara Energy, and HPCL-Mittal Energy, accounted for approximately 60% of India's Russian oil imports in July. Meanwhile, state refiners have pivoted to alternative supplies from the Middle East and the United States to offset the reduced flow of Russian crude during August and September [1]. This shift reflects India's broader strategy to diversify its oil sources while balancing economic and political pressures.

Despite the temporary slowdown, Russian oil continues to dominate India's imports, contributing 34% of its total supply in July. India's overall oil imports for the month were the lowest since September 2023, at 4.44 million barrels per day. Russia remains India's top oil supplier, followed by Iraq and Saudi Arabia [1]. This continued reliance on Russian oil underscores India's commitment to securing its energy needs at competitive prices, even as Western sanctions intensify.

In mid-August, Indian state-run refiners Indian Oil Corporation and Bharat Petroleum Corporation resumed purchasing Russian Urals crude for September delivery. This move followed widened price discounts, which made Russian oil more attractive amid the rising geopolitical pressures [2]. The resumption indicates that India's energy buyers remain attuned to market dynamics and are willing to adjust their procurement strategies in response to shifting conditions.

However, the geopolitical landscape is not without its challenges. The United States has imposed increasingly stringent tariffs on Indian exports, with President Donald Trump explicitly linking the measures to India's continued purchases of Russian oil. These tariffs, set to take effect on August 27, are expected to impact India’s trade balance and could further influence the cost-benefit analysis of importing Russian oil [3].

China has also emerged as a key player in the Russian oil market, stepping in to absorb some of the surplus barrels that India has turned away. Chinese refineries have more than doubled their Urals crude purchases since early August, though this volume remains significantly lower than India’s. As of mid-August, Chinese refiners were importing approximately 75,000 barrels per day of Urals crude, compared to India’s sharply reduced but still substantial 400,000 barrels per day [3].

The evolving dynamics in the India-Russia energy trade highlight the complex interplay of economic incentives and geopolitical pressures. As the U.S. intensifies its sanctions and tariffs against India for its continued engagement with Russian oil, the country is navigating a delicate balance between energy security, economic interests, and diplomatic relations. The resumption of Urals crude purchases by Indian state refiners and the shift in supply strategies suggest that India remains committed to maintaining a stable and cost-effective energy supply chain.

Source:

[1] India's Russian oil imports dip in July, skips LatAm supply (https://www.reuters.com/business/energy/indias-russian-oil-imports-dip-july-skips-latam-supply-data-shows-2025-08-19/)

[2] Indian Oil, BPCL resume buying Russian oil for September (https://www.reuters.com/business/energy/indian-oil-bpcl-resume-buying-russian-oil-september-discounts-widen-sources-say-2025-08-20/)

[3] Russian Crude Exports to India Plunge Threefold (https://www.themoscowtimes.com/2025/08/19/russian-crude-exports-to-india-plunge-threefold-a90279)