Cheap Oil, High Stakes: India’s Delicate Balancing Act Between Moscow and Washington

Published: 17 October 2025. The English Chronicle Desk. English Chronicle Online

India’s energy policy has been thrust into the international spotlight amid growing tensions between Moscow and Washington over the country’s continued purchases of Russian crude. The delicate situation escalated in August when the United States imposed 50 percent tariffs on Indian goods, framed as a punitive measure for importing Russian oil. The issue intensified this week after US President Donald Trump claimed that Prime Minister Narendra Modi had privately agreed to cease Russian oil purchases “within a short period of time,” a statement India quickly distanced itself from.

Russia, for its part, has emphasized the strategic and economic benefits of supplying oil to India. Denis Alipov, the Russian envoy to Delhi, described Russian crude as “very beneficial for the Indian economy and for the welfare of Indian people.” India, in turn, underscored that its import policies are “guided by the interests of the Indian consumer in a volatile energy scenario,” reflecting the country’s effort to balance affordability with diplomatic pressures.

Russian oil has become a cornerstone of India’s energy portfolio in recent years. In 2024, India imported over $52 billion worth of Russian crude, representing 37 percent of its total oil bill, with Iraq, Saudi Arabia, the UAE, Nigeria, and the US following as major suppliers. The surge in Russian imports followed two significant shifts in India’s energy sourcing. Between 2018 and 2022, sanctions on Iran and Venezuela forced India to pivot toward traditional Gulf suppliers, while the onset of the Ukraine conflict dramatically increased India’s Russian purchases, drawn by steep discounts offered after Western sanctions. Russian crude has consistently been 10–14 percent cheaper than alternatives, translating to annual savings of roughly $5 billion for India’s refiners.

These savings, while modest relative to India’s $900 billion import bill, have nonetheless contributed significantly to domestic economic stability. Analysts note that halting Russian imports could trigger higher global oil prices, potentially erasing the gains India has secured and increasing costs not only domestically but globally. Ajay Srivastava, former head of the Global Trade Research Initiative, explains that Russian Urals crude is particularly compatible with Indian refineries, which are calibrated for heavier grades. Replacing it with lighter alternatives from the US or Middle East would require expensive reconfigurations and could reduce yields of diesel and jet fuel.

Yet India’s reliance on Russian oil has not come without geopolitical complications. Washington has ramped up pressure, making the continuation of discounted imports a politically sensitive issue. The potential repercussions include stalled trade negotiations with the US, heightened diplomatic scrutiny, and the need to navigate a volatile balance between energy security and international relations.

Despite these challenges, Indian officials maintain that their import strategy prioritizes affordability for consumers. Analysts note that recent declines in global oil prices—from $78 to $59 per barrel this year—have slightly reduced the urgency to shift away from Russian supplies. Nevertheless, India’s position illustrates the complexity of modern energy geopolitics, where economic pragmatism, refinery compatibility, and diplomatic strategy converge.

As Delhi weighs its options, the trade-offs are clear: continue leveraging discounted Russian crude and risk friction with Washington, or pivot to costlier but politically safer alternatives, potentially raising domestic fuel prices. The decisions made in the coming months are likely to shape not only India’s energy security but also the trajectory of its relations with two of the world’s most influential powers, underscoring the high stakes of the country’s energy diplomacy.