India's Role in Russia's Oil Trade: Implications for Energy Markets and Geopolitical Risk

India's position in Russia's oil trade has emerged as a pivotal factor in global energy markets, reshaping supply chains and challenging U.S. sanctions strategies. As the world's third-largest oil importer, India's procurement of discounted Russian crude has provided a lifeline to Moscow's energy sector while offering New Delhi a strategic lever in a multipolar world. However, recent shifts in buyer behavior, driven by U.S. pressure and geopolitical recalibrations, are testing the resilience of this trade relationship-and with it, the stability of global energy markets.

The Rise and Reckoning of India-Russia Oil Trade

India's crude oil imports from Russia surged to $52.73 billion in 2024, accounting for approximately 36-38% of Russia's total crude exports by mid-2025, according to Trading Economics. This surge followed the imposition of U.S. and EU price caps on Russian oil after its invasion of Ukraine, which created a vacuum India and China swiftly filled. Russian crude, often sold at a $20-per-barrel discount compared to Middle Eastern benchmarks, became a cost-effective solution for Indian refiners, as noted by Nasdaq. By October 2025, India's imports averaged 1.48 million barrels per day (bpd), according to Reuters, a figure that briefly outpaced even pre-Ukraine levels.

Yet this dynamic is now fracturing. U.S. sanctions on Rosneft and Lukoil in October 2025, according to Indian Express, coupled with a 50% tariff on Indian exports under President Trump's administration, as reported by Business Standard, have forced Indian refiners to reassess their exposure. By November 2025, five of India's largest refiners-including Reliance Industries and Bharat Petroleum-had halted Russian crude orders for December, as Business Standard reported. This abrupt shift underscores the vulnerability of supply chains reliant on politically sensitive trade flows.

Geopolitical Leverage and Energy Security Priorities

India's continued engagement with Russian oil reflects a calculated balancing act. Despite U.S. pressure, New Delhi has prioritized energy security over geopolitical alignment, treating Russian crude as a "core component" of its strategy, as noted in Cryptopolitan. This stance is reinforced by India's non-signatory status to the Rome Statute, which allows continued cooperation with Russian President Vladimir Putin, who is set to visit India in December 2025, as Cryptopolitan reported.

However, the U.S. is intensifying its efforts to disrupt this partnership. Sanctions on Russian oil majors have not only curtailed supply but also raised compliance risks for Indian refiners. For instance, Nayara Energy, one of India's largest private refiners, now sources 100% of its crude from sanctioned Russian entities, a practice that could attract secondary sanctions, as Business Standard reported. Meanwhile, U.S. trade talks with India have included conditionalities: increased crude purchases from the U.S. and a rollback of Russian imports, as noted in Times of India.

Supply Chain Resilience: Infrastructure and Alternatives

India's ability to pivot away from Russian oil hinges on its infrastructure readiness and access to alternative suppliers. While the country's port and refinery capacity is robust, the transition to non-Russian sources is not without challenges. Indian refiners are now sourcing from the U.S., Iraq, and the UAE, as reported by OilPrice, but these alternatives come at higher costs. For example, Abu Dhabi Murban crude purchased from Glencore and Guyanese oil from Exxon have added to import bills, as OilPrice reported, eroding the cost advantages once offered by Russian oil.

Infrastructure projects, such as Adani Group's 3.5 gigawatt-hour battery storage system in Gujarat, signal long-term resilience, as reported by Forbes. Yet, immediate capacity constraints remain. Indian Oil Corporation (IOC), the country's largest refiner, has secured 24 million barrels of non-sanctioned Russian crude for early 2026, as reported by OilPrice, but this represents a temporary fix rather than a sustainable solution. The global oil surplus projected for 2026, as noted in Nasdaq, may alleviate some pressure, but India's reliance on spot markets exposes it to price volatility.

Implications for Energy Markets and Investors

The India-Russia oil trade has already disrupted global benchmarks. Russian crude, once a marginal player in Asia, now competes directly with Middle Eastern and U.S. suppliers. This competition has compressed discounts on Russian oil, reducing its appeal as a cost-saving measure, as OilPrice reported. For investors, the key risks lie in geopolitical volatility and compliance costs. Refiners with exposure to sanctioned Russian entities face potential penalties, while those pivoting to alternatives may see margins squeezed by higher prices.

Conversely, opportunities exist for companies facilitating this transition. U.S. and Gulf suppliers stand to gain from increased Indian demand, while infrastructure firms like Adani could benefit from long-term energy storage contracts. Additionally, the push for renewable energy-such as Adani's battery project-aligns with India's net-zero goals, offering a hedge against fossil fuel volatility, as Forbes reported.

Conclusion: A Tenuous Equilibrium

India's role in Russia's oil trade exemplifies the fragility of energy supply chains in a geopolitically charged era. While New Delhi has demonstrated resilience in maintaining energy security, the U.S. sanctions regime and shifting buyer behavior are forcing a recalibration. For now, India's strategy appears to balance short-term pragmatism with long-term strategic goals. However, the sustainability of this equilibrium will depend on how swiftly it can diversify suppliers, modernize infrastructure, and navigate the geopolitical crosscurrents shaping global energy markets.