India’s Energy Balancing Act: The Resilient Russian Oil Trade in a Sanctioned World 

India’s Energy Balancing Act: The Resilient Russian Oil Trade in a Sanctioned World 

In the high-stakes arena of global energy geopolitics, a single statistic tells a compelling story of defiance and pragmatism: despite the implementation of new U.S. sanctions targeting Russia’s top oil producers, India’s imports of Russian crude are expected to exceed 1.2 million barrels per day (bpd) in December 2025. This figure, while down from November’s 1.77 million bpd, defies predictions of a collapse and underscores a deep resilience in a trade relationship that has become a cornerstone of India’s energy security. The story behind these numbers is not one of simple non-compliance, but a complex narrative of economic necessity, sovereign calculation, and the remarkable adaptability of global energy markets under pressure. 

The Unwavering Numbers: A Trade That Refuses to Die 

India’s relationship with Russian oil underwent a seismic shift following the 2022 invasion of Ukraine. Before the conflict, Russia supplied a modest 2-2.5% of India’s crude imports. Lured by steep discounts as Moscow sought new buyers, that share skyrocketed, accounting for over a third of India’s imports in recent fiscal years and briefly making India the world’s largest buyer of seaborne Russian crude. 

The latest challenge came in late 2025, when U.S. sanctions on Russian giants Rosneft and Lukoil—which together handle about 60% of the Russian crude imported by India—took effect on November 21. The immediate market response among many Indian refiners was caution. Major players like Reliance Industries (until recently the single-largest purchaser), Mangalore Refinery, and HPCL-Mittal Energy moved to halt new purchases from the sanctioned entities. 

However, the overall trade flow has proven stubbornly persistent. The anticipated sharp December decline has instead softened into a moderated dip, with imports sustained by a last-minute rush to beat the sanctions deadline and, more importantly, by a quick pivot to alternative sources. 

Monthly Russian Crude Oil Imports to India (2025) 

The “How”: Mechanisms of a Resilient Trade 

This resilience is not accidental; it is engineered through a series of sophisticated workarounds that have emerged in the “shadow” economy of sanctioned oil. 

• The Rise of Non-Sanctioned Suppliers: With Rosneft and Lukoil off-limits for dealings with the U.S. financial system, other Russian oil companies have stepped into the breach. Entities like Surgutneftegaz and Gazprom Neft (which faces lighter, “sectoral” sanctions) are now channeling more oil to India. This is facilitated by domestic market swaps, where sanctioned oil is redirected to Russia’s home refineries, while non-sanctioned companies increase their exports to partners like India. 

• The “Shadow Fleet” and Opaque Logistics: A key enabler is the now-notorious “shadow fleet”—older tankers that use non-Western insurance, flags, and registration to operate outside the reach of G7 sanctions. A report identified that in the first nine months of 2025 alone, 30 vessels sailing under false flags delivered 5.4 million tonnes of Russian oil to India. This opaque network allows the physical oil to keep moving even as traditional financing and insurance dry up. 

• Strategic Stockpiling and Contract Timing: Refiners strategically front-loaded purchases in the weeks before the November 21 deadline, leading to the November import spike. These pre-sanction contracts continue to deliver cargoes into Indian ports in December, cushioning the immediate fall. 

A Divided Refining Sector: Risk Tolerance Dictates Strategy 

The response to sanctions has not been uniform across India’s refining industry, revealing a split defined by ownership structure and risk appetite. 

• The Cautious Private Giant (Reliance): Reliance Industries, with its vast international business interests and reliance on dollar financing, has taken the most cautious approach. It has halted its substantial term contract with Rosneft and is avoiding new Russian crude purchases to mitigate “secondary sanction” risks from the U.S.. 

• The All-In Russian Affiliate (Nayara Energy): At the opposite pole is Nayara Energy, which is 49.13% owned by Rosneft. Already sanctioned by the EU in July 2025, Nayara has doubled down, sourcing exclusively from Russia and even ramping its Vadinar refinery to 90% capacity. For Nayara, the geopolitical risk is already realized, making deeper dependence a logical economic choice. 

• The Pragmatic State Players (IOC, BPCL, HPCL): India’s state-owned refiners occupy a middle ground. They are continuing imports but are navigating carefully through non-sanctioned intermediaries. Indian Oil Corp. (IOC) has bought millions of barrels of Russian crude for December arrival from such sellers, while Bharat Petroleum has increased its January bookings. Their strategy balances the imperative for affordable oil with the need for nominal compliance. 

The Geopolitical Chessboard: Sovereignty, Pressure, and Hypocrisy 

Beyond the mechanics of tankers and swaps, this ongoing trade is a act of geopolitical defiance with significant diplomatic ripples. 

• India’s Sovereign Stance: Indian and Russian leaders have framed the continued trade as a matter of national sovereignty and economic interest. During a December summit in New Delhi, President Vladimir Putin promised “uninterrupted shipments,” while Prime Minister Narendra Modi affirmed energy security as a pillar of the partnership. Kremlin spokesman Dmitry Peskov put it bluntly: India purchases energy “where it is beneficial for India”. This stance is a direct pushback against Western efforts to dictate the foreign policy of non-aligned nations. 

• Intense and Direct U.S. Pressure: The United States has not been subtle in its disapproval. The Trump administration doubled tariffs on Indian goods to 50% in 2025, explicitly citing the oil trade as a reason. U.S. officials have accused India of acting as a “global clearinghouse for Russian oil,” converting embargoed crude into refined products for global export and thereby funding Moscow’s war machine. A long-awaited U.S.-India trade deal now hangs in the balance. 

• The Charge of Hypocrisy: Russia has adeptly highlighted Western contradictions. Putin pointed out that while asking India to stop buying Russian oil, the United States itself imported a record $1.2 billion worth of Russian enriched uranium in 2023 for its nuclear power plants. This argument resonates in New Delhi, reinforcing the view that the sanctions regime is selectively applied and that India is justified in pursuing its own economic interests. 

The Road Ahead: A Sustained, Yet Transformed, Partnership 

The future of the India-Russia oil trade will be defined by lower volumes but greater complexity. Imports are unlikely to return to their mid-2024 peaks but are projected to stabilize at a significant level—likely above 1 million bpd in the near term. This new equilibrium comes with costs and consequences. 

India is actively diversifying to mitigate risk, increasing imports from the U.S., the Middle East, and Latin America. However, the attraction of deeply discounted Russian crude—reportedly as much as $6 per barrel below Brent in January—remains a powerful economic incentive for a price-sensitive economy. Furthermore, the medium-sour grade of Russian Urals crude is ideally suited to the configuration of many Indian refineries. 

The ultimate irony, noted by analysts, is that while the sanctions have made the trade more convoluted, they have also forced Russia to sell its oil at even steeper discounts. A U.S. official claimed this pressure is “limiting the Kremlin’s revenues”. In this light, India’s resilient imports represent a paradox: they provide Moscow with a crucial financial lifeline, but on terms that are far less lucrative than before the war, all while New Delhi navigates the treacherous waters of great-power politics to keep its own economic engine running.