The executive order came through quietly but had a huge impact on strategic thinking. The United States is getting rid of the punitive tariffs imposed on Russian oil imports; however, those conditions may make people unsure about what energy sources they should be looking at. India is coming under scrutiny for how it will source crude oil. Russian oil had formed the basis for India’s import basket for several years. The discounted price of those supplies helped Indian refiners to mitigate the impact of rising prices worldwide.
Sanctions and diplomatic relations with Russia are influencing those assumptions very quickly. The trade agreement that ties together tariffs on oil imports through energy-producing countries and how countries govern themselves has raised the question of whether India has strategic autonomy. Officials were somewhat careful in their response to these changing dynamics, avoiding making any categorical commitments and instead emphasizing the idea of continuity and national priorities.
The market data currently shows that the volume of oil flowing from Russia to India is decreasing. Analysts are, however, warning against thinking there will be a sudden severing of trade ties between the two countries. Energy decisions are rarely made in a day, so this situation tests the balance between diplomacy and pragmatism.
What the US order claims versus India’s position
The Executive Order from the US government indicated a specific expectation. In particular, it claimed that India had agreed to stop importing Oil from Russia. It also stated that if India resumed its purchase of Oil from Russia, penalties might reapply.
However, there were no explicit references to Russia in the Bilateral Trade Agreement framework. The focus of the framework was on the reduction of tariffs and the expansion of trade. V majorly misstated India’s official position. “India’s approach on crude oil purchases has been to maintain multiple sources of supply and diversify them to ensure stability and security. The national interests will be the guiding factor for us in our choice.” Furthermore, he stated that being dependent on just one supplier was not how India would buy Crude Oil.
Energy Security for over 1.4 billion people would guide their purchase of Oil. They would not confirm they had totally ceased all Imports of Oil from Russia. However, Refiners were reported to be eating to understand how the US EO would affect their Business, and therefore they remain in compliance with all of their existing Contracts. The Message from the US and India remains somewhat divergent.
Will India’s Russian Oil Strategy Change Sharply Now?
Data provides evidence of a downward trend, with significant declines in washes from 2024 highs due to sanctions placed on Russian producers that limited channels; reports indicate that the number of spot purchases has been reduced while the amount of contracted volume has been locked in for multiple weeks at a time; and analysts anticipate that there will be reductions, but not complete elimination.
“National interests will be the guiding factor for us in our choices for energy procurement…We are neither dependent on any single source for this, nor do we intend to be. And it is natural for the mix of sources to vary from time to time, depending on objective market conditions. Our approach is to maintain multiple sources of supply and diversify them as appropriate to ensure stability. Therefore, I would say that the more diversified we are in this area, the more secure we are,” he said.
Other refiners may also keep a limited number of volumes from Russia. Some refiners are expected to continue buying limited volumes from Russia, such as Nayara Energy (due to restrictions), although most experts expect supply stabilization to occur at lower levels. Meanwhile, supply and production out of the US and the Middle East are expected to increase. Thus, India is gradually yet systematically recalibrating and re-mapping its entire energy supply procurement system. Analysts expect India’s Russian oil strategy to evolve gradually rather than shift abruptly.
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