India-Russia Relation / Stopping the import of crude oil from Russia is a huge loss-making deal, so many dollars will be lost

India-Russia Relation: India, the world's third-largest oil consumer and importer, is largely dependent on imported crude oil for its energy needs. India gained significant economic benefits by buying cheap oil from Russia amid sanctions imposed on Moscow by Western countries after Russia's invasion of Ukraine in February 2022. However, US President Donald Trump's recent announcement of a 25% duty on Indian goods and possible penalties on purchases of oil and weapons from Russia has created a complex situation for India. Analysts estimate that if India stops importing crude oil from Russia, the country's annual oil import bill could rise to US$9-11 billion.

Impact of US threats

The US has notified a 25% duty on Indian goods, but the amount of the penalty on oil and arms purchases from Russia has not yet been clarified. Sumit Ritoliya, lead research analyst at global analyst Kpler, has termed it as "two-way pressure". On the one hand, EU sanctions are impacting Indian refineries, while on the other hand, the threat of US tariffs and penalties is weakening India's Russian oil trade infrastructure. According to Ritoliya, these measures reduce India's flexibility in crude oil purchases, increase compliance risk and create huge uncertainty in costs.

According to Kpler data, India's Russian crude oil imports have declined significantly in July 2025, falling to 1.8 million barrels per day from 2.1 million barrels per day in June. However, this decline may also be due to routine refinery maintenance and weak monsoon-induced demand to some extent. This decline is particularly pronounced among state-run refiners, while private refineries are also trying to diversify their purchases.

Rising oil imports from the US

India has sharply increased crude oil imports from the US in 2025. Crude oil imports averaged 0.271 million barrels per day between January and June 2025, up 51% from the previous year. The growth was as high as 114% in the April-June quarter. In July 2025 itself, 23% more oil was imported from the US than in June. Currently, the US accounts for 8% of India's total crude oil imports, up from only 3% last year. The value of these imports reached $3.7 billion in the first quarter of FY 2025-26, compared to $1.73 billion last year.

Apart from this, India is also increasing imports of liquefied natural gas (LNG) and liquefied petroleum gas (LPG) from the US. The value of LNG imports reached $2.46 billion in FY 2024-25. Long-term energy agreements worth billions of dollars are being negotiated between the two countries, which is expected to further strengthen the India-US energy partnership.

Economic and strategic challenges

The decision to stop importing oil from Russia poses several economic and strategic challenges for India. Russian oil prices were significantly lower than other global suppliers, which helped India control its energy costs. Stopping imports from Russia would require India to turn to more expensive sources, such as the US or other Gulf countries, which could increase the oil import bill by $9-11 billion. This increase would not only affect India's trade balance, but also fuel prices and inflation domestically.

In addition, India's long-standing strategic relationship with Russia could also be harmed. Russia has been a major defense partner of India, and oil trade had further strengthened economic ties between the two countries. The decision to distance itself from Russia due to US pressure could complicate India's geopolitical position.

The way forward

The challenge before India now is how it copes with international pressures while maintaining its energy security. To reduce dependence on Russian oil, India will have to enter into long-term agreements with alternative suppliers. Increasing imports from the US is a step in this direction, but ties with other countries, such as Saudi Arabia, Iraq and the United Arab Emirates, will also need to be strengthened. At the same time, India will have to focus on increasing its domestic energy production capacity, especially renewable energy, to reduce dependence on imports.