India’s imports of Russian oil soared to an 11-month high in June, solidifying Russia’s position as New Delhi’s top crude supplier, even as a controversial US bill proposing high tariffs on Russia’s trading partners sparks concern.
Russia Remains India’s Top Oil Supplier
India’s reliance on Russian crude reached unprecedented levels in June. Russian oil accounted for a staggering 43.2 percent of India’s total oil imports, significantly more than the combined share of its next three suppliers: Iraq, Saudi Arabia, and the United Arab Emirates.
This surge pushed Russian imports to 2.08 million barrels per day (bpd), marking the highest volume since July 2023. This robust flow further cements Moscow’s continued dominance in New Delhi’s oil import basket.
US Bill Raises Concerns
A proposed US bill is casting a shadow over this booming trade. This legislation suggests a steep 500 percent tariff on countries that continue to engage in trade with Russia.
With India and China being major importers of Russian crude, New Delhi is actively engaging with American lawmakers to voice its concerns about energy security.
Foreign Minister S Jaishankar recently confirmed that India has discussed its energy interests with Republican Senator Lindsey Graham, a key sponsor of the bill. Jaishankar noted that India would “have to cross the bridge when we come to it,” indicating a watchful approach.
Senator Graham stated that former President Donald Trump encouraged him to push the bill forward after the July break of the US Congress.
What if the Bill Passes?
The future of this bill remains uncertain. If it becomes law in its current form, India might face pressure to reduce Russian oil imports and seek more expensive alternatives.
This could lead to higher import costs and potentially complicate ongoing trade pact negotiations between India and the US, currently India’s largest trading partner. For now, Indian refiners are observing the situation while maintaining robust Russian oil flows.
Why India Chooses Russian Oil
India imports approximately 88 percent of its crude oil, and Russia has been a crucial supplier for nearly three years. After the Ukraine conflict, many Western nations stopped buying Russian crude, leading Russia to offer discounted prices to other buyers.
Indian refiners quickly capitalized on this opportunity, transforming Russia from a minor supplier into India’s primary source of crude. India maintains that it will buy oil from any source offering the best price, provided it isn’t under sanctions.
While Russian oil itself isn’t sanctioned, the US and its allies have imposed a $60 per barrel price cap. This limits Western shipping and insurance participation if the price exceeds this cap.
Diversifying India’s Oil Basket
While Russia dominates, West Asian suppliers like Iraq, Saudi Arabia, and the UAE still play significant roles due to their proximity and reliability. In June, Iraq supplied about 893,000 bpd (18.5 percent share), Saudi Arabia 581,000 bpd (12.1 percent), and the UAE 490,000 bpd (10.2 percent).
The US also remains a notable supplier, ranking third in June with 303,000 bpd and a 6.3 percent market share.
India is actively working to diversify its crude sources, exploring options from Africa, Latin America, and the US. This strategy aims to optimize refinery economics, manage geopolitical exposure, and enhance overall energy security.
However, US crude often comes with higher freight costs and longer voyages, which can limit its short-term expansion unless conditions become more favorable.
- India’s Russian oil imports hit an 11-month high in June, making Russia the dominant supplier.
- A proposed US bill threatens high tariffs on countries trading with Russia, raising concerns in India.
- India continues to buy Russian oil due to competitive pricing and geopolitical considerations.
- India is exploring diversification of its oil imports beyond traditional and current major suppliers.
India’s energy sourcing decisions continue to be shaped by a complex interplay of economic incentives, geopolitical shifts, and the ongoing pursuit of energy security.
