Russia emerges as India's major crude oil supplier, amidst the threat of US sanctions

While the US is threatening sanctions and higher tariffs against countries trading with Russia, the value of India’s crude imports from Russia has surged at a compounded annual growth rate (CAGR) of 96% during FY20-FY25, says a study.

India, the third-largest oil consumer and importer in the world, imported crude oil worth $50.285 billion in FY25, with Russian oil accounting for the largest 35% share of crude imports into India. In contrast, the share of crude imports from Russia was only 2% worth $1.755 billion in FY20, which increased to $31.025 billion with a share of 19% by FY23. Now, the share of traditional crude-importing countries like Iraq has come down to 19% ($27.356 billion) in FY25 from 22% in FY20 ($22.765 billion). Similarly, the share of crude imports from Saudi Arabia has also come down from 20% worth $20.355 billion in FY20 to 14% worth $20.094 billion in FY25, says a new report by Rubix Data Sciences, a risk management and monitoring company.

The report says this shift has helped Indian refiners secure cost-effective barrels, improve margins through discounted grades like Urals and ESPO, and reduce exposure to vulnerable routes such as the Strait of Hormuz. This ultimately boosts India’s competitiveness in global refined product exports. To strengthen its energy resilience, India is expanding its Strategic Petroleum Reserve from 75 to the IEA-recommended 90 days of cover and, for the first time, allowing private sector participation and commercial trading.

At the same time, the report flags growing vulnerabilities. The crude import dependency has reached 88%, as domestic oil production is declining at a 2% CAGR, and natural gas imports now meet about half of total demand. With consumption projected to rise 60% by 2030 and the oil import bill touching $137 billion in FY25, the economy remains exposed to global price swings. Even so, the sector offers significant headroom for growth. The report estimates investment opportunities worth $100 billion in exploration and production by 2030, $67 billion in gas infrastructure, and $87 billion in petrochemicals, pointing to a strong pipeline of potential expansion, with key players positioning themselves to scale capacity and deepen integration across the value chain.

While fossil fuels remain central, the report highlights India’s parallel progress in scaling clean energy solutions, such as achieving the 20% ethanol blending target in petrol six years ahead of the deadline, saving Rs 1.5 lakh crore in foreign exchange, and a 63% expansion in City Gas Distribution networks since 2014, backed by Rs 120 crore in new investments planned for the coming decade. “Energy and geopolitics are now inseparable, and India’s oil and gas strategy reflects this reality. Our role at Rubix is to provide the clarity stakeholders need to anticipate risks, understand shifting trade dynamics, and make confident decisions in a volatile environment," says Mohan Ramaswamy, co-founder and CEO of Rubix Data Sciences.

In a recent note, S&P Global Commodity Insights noted that the European Union's decision to slap sanctions on Vadinar refinery will prompt the Rosneft-backed Indian unit to turn its attention to exporting products to Southeast Asia, Latin America and Africa, enforcing crude-origin tracing would be a technically and logistically complex process. The six-month transitional period on oil product exports provides Nayara Energy, which owns the Vadinar refinery, time to develop an alternative export strategy, while also looking at the possibility of Rosneft selling its stake.

"The recent EU sanctions against Rosneft, which owns about 49% of Nayara refinery, are set to create significant challenges for Nayara as it is likely to have a pronounced impact on its jet fuel and kerosene sales, which were primarily being exported to Europe," said Abhishek Ranjan, South Asia oil research lead at S&P Global Commodity Insights.

Nayara Energy's 400,000 b/d Vadinar refinery has received 403,000 b/d of crude so far this year, out of which 72% has been Russian-origin crude grade, according to S&P Global Commodities at Sea.

On July 18, the EU banned imports of refined products made from Russian crude oil, revised its oil price cap mechanism, and blacklisted over 100 shadow fleet tankers. Following the EU's announcement, the Indian government said it does not subscribe to any unilateral sanctions measures. "We are a responsible actor and remain fully committed to our legal obligations. We would stress that there should be no double standards, especially when it comes to energy trade," India's foreign ministry said in a statement on July 18.