Key Takeaways
India will continue to procure crude oil from Russia based on commercial and strategic needs, a top government official confirmed, a decision that helps explain why global oil prices remain firm despite the apparent de-escalation of the Iran-U.S. conflict. The statement shores up the demand side of the global oil equation, providing a new layer of support for prices above $110 a barrel.
"Regarding the American waiver on Russia, I would like to emphasise that we have been purchasing from Russia earlier... before waiver also, during waiver also, and now also," Sujata Sharma, joint secretary in the petroleum ministry, said at a media briefing. She noted the country’s procurement strategy is guided by commercial logic and supply security.
The decision comes as Indian fuel retailers grapple with significant financial strain. State-owned oil marketing companies (OMCs) recently saw their combined daily losses fall to ₹750 crore from ₹1,000 crore after a ₹3-per-litre fuel price hike, according to Sharma. The price increase only partially offsets under-recoveries, which still run at an estimated ₹1 trillion per quarter. Compounding the issue, freight rates for liquefied petroleum gas (LPG) have surged to $207 per tonne from $94 pre-war, while costs for very large crude carriers have doubled to $28.64 per tonne.
India’s commitment to Russian supply, even with the U.S. waiver expiring, signals a structural shift in global energy flows. For the world’s third-largest oil importer, the combination of supply security and discounted pricing from Russia now outweighs the complexities of navigating sanctions, suggesting a durable new floor for global crude prices as a key buyer remains active.
India's stance highlights a pragmatic shift from sanctions optics to supply and cost fundamentals. With continued geopolitical instability near the Strait of Hormuz, Russian barrels transported via non-Strait routes offer a significant logistical and pricing advantage.
According to Sumit Ritolia, a refining analyst at Kpler, Russia is expected to remain a core supplier for India as there are limited alternatives available at a similar scale and price. The adjustment for Indian refiners is therefore more likely to be operational—tightening screening for sanctioned vessels and entities—rather than a structural move away from Russian crude. This ensures energy security, which has been heavily reliant on Russian imports since the war began.
The financial burden on state-run OMCs remains a key domestic challenge. The recent fuel price hike provided some relief, but with under-recoveries persisting, further price adjustments may be necessary if global crude prices remain elevated.
The surge in freight costs represents a direct hit to import margins for refiners and OMCs. The increase in shipping charges for crude, LPG, and containers points to broader supply-chain disruptions that are feeding into higher energy import bills for the nation. This logistical pressure, combined with high crude prices, will continue to strain the finances of state-run fuel retailers.
This article is for informational purposes only and does not constitute investment advice.
