India’s energy math could be headed for a messy recalculation. Analysts say the country may have to shell out an extra $9–11 billion annually on crude imports if it’s forced to back away from Russian oil—an outcome that’s looking more plausible with the United States tightening its stance.
Ever since Russia’s invasion of Ukraine in February 2022, India smartly pivoted to discounted Russian crude, turning what was once a minor supplier into its top oil source. Russian oil, which barely accounted for 0.2% of India’s imports before the war, now makes up a massive 35–40% of the country’s crude intake.
Cheaper energy, relatively steady retail fuel prices, lower import bills, and some breathing room on inflation are the basic impacts. It also gave Indian refiners an edge in the export market—refining discounted crude and shipping finished petroleum products globally, even to regions that had banned Russian oil directly.
But that playbook is now under serious threat.
US President Donald Trump’s fresh announcement of a 25% tariff on Indian goods, paired with an unspecified penalty on countries importing oil and weapons from Russia. While the tariff has already been notified, the exact nature of the penalty remains unclear. But the signal is loud and clear: Washington isn’t happy with Delhi’s continued ties with Russian energy.
This comes on the heels of the European Union’s decision to ban refined petroleum products derived from Russian-origin crude starting January 2026. For Indian refiners, that’s two big markets turning increasingly hostile at the same time.
Energy experts are calling this a classic “squeeze from both ends”. Sumit Ritolia, lead research analyst for refining at global analytics firm Kpler, notes that India now faces pressure on both the input and output sides of its oil trade.
On one hand, the EU’s 2026 sanctions may force Indian refiners to rethink what kind of crude they buy and how they segment it. On the other, the US threat of secondary sanctions looms large over critical services that make the Russia-India oil corridor possible—shipping, insurance, and financing.
Increased compliance risks, tighter crude sourcing options, and a whole lot of cost uncertainty for oil companies that had, until recently, been posting record profits.
India, the world’s third-largest oil consumer and importer, now finds itself at a crossroads. Moving away from Russian oil would mean returning to more expensive market-priced crude, driving up the overall import bill and possibly fuelling inflation at home.
But sticking with Russia could mean falling foul of US sanctions or seeing export doors gradually shut in Europe.