'Real money': how the war in the Middle East exposed India's dependence on Russian oil
Indian Prime Minister Narendra Modi and Russian President Vladimir Putin arrive at the residence of the Prime Minister of India, where an informal dinner will be held in New Delhi, India on Dec. 4, 2025. (Kremlin Press Service/Anadolu via Getty Images)
on GoogleThe United States has granted New Delhi a temporary waiver allowing it to purchase fuel from Moscow, pausing prior attempts to cut India off Russian energy.
"To enable oil to keep flowing into the global market, the Treasury Department is issuing a temporary 30-day waiver to allow Indian refiners to purchase Russian oil," U.S. Treasury Secretary Scott Bessent said in a social media post on March 5.
Bessent said other exemptions may follow, as oil prices briefly climbed over the $100 mark 10 days after the U.S. began its military campaign against Iran. The Kyiv Independent has learned that the White House is considering reducing sanctions on Russian oil altogether.
These steps mark a U-turn in developments over the past months, as India had been gradually reducing its purchases of Russian oil, standing at roughly 20% of total imports in January 2026. In mid-2024, nearly half of India's imported crude was still delivered by Moscow.
While U.S. sanction pressure — especially restrictions imposed on Lukoil and Rosneft in October — has greatly contributed to this drop, it has not and will not push India to immediately cease all oil trade with Russia, according to field experts who spoke to the Kyiv Independent.
Instead, Russian crude imports were set to gradually but consistently decrease over the coming months. The recent exemption caused by the war in the Middle East has kicked that plan off the rails.
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Price is key
Before 2022 and Russia's full-scale invasion of Ukraine, Russian oil made up only an insignificant share of Indian oil imports. Traditionally, New Delhi relied on purchases from Gulf countries: this was both logistically easy, given geographic proximity, and justified by the Middle East's historic weight in global oil exports.
However, some of the restrictive measures imposed on Russia after the start of the full-scale invasion actually incited India to revert to Russian crude.
"Paradoxically, after the introduction of the price cap on Russian oil by the EU, India was able to avail itself of lower-cost purchases from Russia," said Clayton Seigle, a senior fellow focusing on energy at CSIS, a think tank based in Washington, D.C.
Much of these oil exports were made possible by Russia's use of its shadow fleet, and the fact that the tankers which were part of it were long able to transport crude, despite a set of legal and financial issues. Initial sanctions on Russia's shadow fleet were only imposed in the last weeks of the Biden administration, with some European countries recently following suit in taking on Russian tankers engaging in illicit oil trade.
As Russian oil remained cheap, India had no serious stimulus to divert away from these imports. This was also made possible by a long-standing political proximity between India and the Russian regime.
"Aside from the heavy discounts, in the political spectrum, there is this feeling that Russia and India share some kind of bond, which also implies friendly relations in the energy sector," said an Indian journalist specializing in commodity trade. He spoke anonymously as he was not authorized to speak to the press.
Historic links, however, were far from being the only incentive.
"Some of India's refineries are owned by private entities, but most are state-owned," explained Vaibhav Raghunandan, an energy analyst at the Center for Research on Energy and Clean Air, a think tank based in the Netherlands.
"And thanks to cheap Russian crude, the margins of these refineries have been super high. This translated into real money for all those involved in the refining process."
US sanctions on and off
Indian oil imports from Russia began sharply declining in November 2025. While the reasons for this drop were not immediately clear, sector experts later concluded that U.S. sanctions on Russian oil giants Lukoil and Rosneft were the main stimulus.
Despite recent remarks by U.S. President Donald Trump, who claimed that India had agreed to stop buying Russian oil in exchange for signing a trade agreement with the U.S., it was the complication of doing business with Moscow's energy giants that did the trick.
"It's important to clarify that the Indian government has not said anything like Trump, that India will diversify because of the trade deal (with the U.S.)," Raghunandan said. "This is not happening because of some sort of diplomatic agreement. It's happening quite simply because of the sanctions (on Rosneft and Lukoil)."
The mere existence of the sanctions, however, does not mean that India will automatically continue its decrease in Russian oil purchases, as circumvention of the measures will remain a major challenge.
"Put quite simply, the shadow fleet will still need to be tackled, as well as new companies that are going to be set up to act as intermediaries (for trade with Russian oil giants)," Raghunandan said.
Risking Russia's return
Indian authorities made a political decision to partially divert away from Russian oil, only to pause the decision in light of a new war in the Middle East, which began following American-Israeli strikes on Iran on Feb. 28.
"This deliberately short-term measure will not provide significant financial benefit to the Russian government as it only authorizes transactions involving oil already stranded at sea," Bessent said following the decision to waive current restrictions imposed on Russian oil.
"India is an essential partner of the United States," Bessent said, adding that Washington expects New Delhi to increase purchases of U.S. oil. "This stopgap measure will alleviate pressure caused by Iran's attempt to take global energy hostage."
As to what happens next, much will depend on how long the war against Iran will last, Raghunandan argued. "According to Indian officials, the country's oil reserves can last between 75 and 90 days, providing some margin to brace for shock," the energy expert said.
Before the start of war in the Middle East, at least, Indian government officials specializing in the sector had told refiners, both state-run and private, to reduce procurement from Russia "wherever possible," according to the Indian journalist who spoke with the Kyiv Independent on conditions of anonymity.
Still, it is unclear whether this will translate into a long-term reorientation of the Indian market, as much will depend on the will of the Trump administration to enforce sanctions for trade with Russian oil, once and if the temporary exemptions are lifted.
"We're waiving certain oil-related sanctions to reduce prices," Trump said on March 9. "So we have sanctions on some countries. We're going to take those sanctions off until this straightens out."
"Then who knows, maybe we won't have to put them on."
According to Seigle, enforcement is not a given, considering the general slow pace at which restrictive measures were imposed on Russian crude. Following the adoption of sanctions several months ago, even before the war in the Middle East, the Trump administration would now have decided to "take its foot off the gas" when it comes to convincing India to stop buying Russian oil, Seigle argued.
One possible explanation for this approach could be the progressive understanding among U.S. officials that India will not start buying American oil instead of Russian fuel. This is because of the specific capacities of Indian refineries, which make them better suited for the types of crude produced by Russia or Middle Eastern countries.
In any case, some Russian oil will certainly remain on the Indian market, at least due to the fact that one of India's largest refineries is currently co-owned by Rosneft, as highlighted by Raghunandan.
Aside from this, the Indian government simply does not have the political will to fully divert away from Russian fuel.
"The Indian policy right now is to try and diversify imports to as many countries as possible," the anonymous Indian journalist explained. "So, (in any case) there won't be a complete stop to Russian fuel imports, and some of these will continue."
