Trump Effect? India Increases US Oil Import Share Sharply As Russia Sanctions Loom

The curbs around Russian energy purchase is likely to have an impact on how India will consume crude oil going ahead. India sourced 2% of its overall crude imports from Russia before the Ukraine war, but the same surged to 35-40% since then.

There has been a strategic shift in the sourcing of the crude from the US in the period between April and June 2025. India has imported 6.23 million tonnes worth $3.71 billion from the US alone, accounting for 8.5% of the overall crude imports.

India has maintained that its decision on how and where to buy the crude from will depend on its energy security needs.

According to government data, in the calendar year 2024, India imported 246.85 million tonnes of crude amounting to $147.23 billion.

India sourced 89.54 million tonne of crude from Russia, accounting for 36.3% of the total crude imported by the country. This amounted to $52.2 billion of crude it bought in value terms. After Russia, Iraq was the second biggest exporter, accounting for 20.5% of the total imports and amounting to $50.70 billion.

India imported 13% of the crude requirement from Saudi Arabia and 9% from the UAE.

On the other hand, imports from the United States accounted for only 3.5% of the total crude sourced, amounting to $5.37 billion of crude.

In the first six months of calendar year 2025, India has imported 72.88 million tonnes of crude worth $38.99 billion. Russian crude oil accounted for 33.7% of the total crude imports, followed by Iraq at 19%, Saudi Arabia at 11.6%, and the UAE at 9.7%.

The continuance of Russia-Ukraine war has hardened the stance taken by Europe and the US against the sale of Russian crude oil. European Union imposed sanctions last week that led to curbs against Indian refinery Nayara Energy, owing to Rosneft ownership in the company.

The US, as part of its aggressive tariff strategy, has imposed 25% levies and unspecified penalty on India for sourcing crude oil from Russia. The quantum of the penalty is yet to be specified but any secondary tariff on India for sourcing crude from Russia will impact more than one-third crude the country imports from a long-standing geopolitical partner.

The government has already instructed Indian refiners to ensure security of crude supplies and mitigate dependence from a single region. Indian oil public sector undertakings have diversified their crude basket and are procuring crude from countries located in various geographical locations viz. Middle East, Africa, North America, and South America, among others.

The stringent curbs on Russian crude will not only impact India but also impact crude prices globally. While India may have to ramp crude from other regions, but stoppage of Russian crude will send a supply shock across the region and send prices soaring, which in turn could impact the the current account deficit. Currently all current account deficit estimates by the street has factored $80 per barrel as the crude prices. As a thumb rule, every $10 rise in crude price will increase the current account deficit by 0.3% of GDP.

This could also have an impact on inflation, which is presently at comfortable levels. The RBI, in its inflation projections, has factored crude price at $80 per barrel. If the crude basket price breaches $80 per barrel, it will start showing up in the retail and wholesale inflation. Currently India's crude basket is priced between $65-70 per barrel.

India may have to look at other sources for crude import to reduce dependence on Russian crude, but how will it tackle the supply shock and associated price spiral will be keenly watched.