By Annunthra Rangan 

The Donald Trump administration’s announcement of sweeping new sanctions on Russia’s two biggest oil companies—Rosneft and Lukoil—has sent tremors through global energy markets. The October 2025 measures, billed as the most severe escalation of economic pressure since the Ukraine war began, are designed to choke off the Kremlin’s oil revenues that fund its military machine.

But in doing so, Washington has also set off shockwaves in New Delhi, which has grown dependent on cheap Russian crude since 2022.

These sanctions not only freeze US assets of the targeted companies, but also threaten secondary sanctions—penalties on any global entities, including Indian refiners and banks, that continue doing business with them. The move extends America’s punitive reach deep into the arteries of global oil trade—shipping, insurance, and financing.

Crude prices spiked instantly, and oil-importing nations like India found themselves staring at a familiar crossroads: how to secure energy without sacrificing diplomacy.

THE ROOTS OF DEPENDENCE

India’s energy hunger is structural. The country imports over 80 percent of its crude oil, and since 2022, Russia’s steep discounts turned it from a marginal supplier into India’s largest source. By 2025, India was importing 1.9 million barrels per day of Russian crude, accounting for a third of its total demand—worth more than $50 billion annually.

The shift was as much economic as strategic. Russian oil, sold at up to $25 per barrel below Brent, kept inflation in check and secured steady supply lines during global turbulence. But with both Rosneft and Lukoil now blacklisted, India’s refiners face an immediate question: can they keep buying without violating sanctions?

SANCTIONS SHOCKWAVES

Transactions, freight, and insurance—all of which depend heavily on the US dollar and Western intermediaries—could be frozen overnight. Refiners fear that even compliant shipments might get stranded if financial institutions err on the side of caution.

While India insists it will continue buying Russian oil “as long as it is compliant with sanctions,” the reality is that most of its Russian crude flows through the very firms now targeted.

A CALCULATED RECALIBRATION

The government’s likely response is gradual diversification. Crude imports from the US have already surged to record highs, while Middle Eastern supplies are being ramped up. Analysts estimate the cost impact—a $1.5-3 billion rise in India’s annual import bill—is significant, but manageable.

More serious is the diplomatic cost. Cutting Russian oil too sharply risks antagonising Moscow; refusing to do so risks US penalties and jeopardises ongoing trade talks with Washington.

BETWEEN TWO POWERS

India’s strategic autonomy doctrine is being stress-tested. Moscow remains a crucial partner in defence and energy, but Washington offers trade leverage, technology, and geopolitical partnership in the Indo-Pacific.

For now, New Delhi appears intent on walking the middle path—reducing exposure to sanctioned Russian entities while keeping some trade alive through intermediaries and non-dollar transactions.

AN ENERGY CHESSBOARD

Every oil barrel is now a piece on a global chessboard. For Washington, India’s compliance represents a diplomatic win; for Moscow, continued—even reduced—trade is a lifeline. For New Delhi, it is about preserving flexibility in an era where alignment is as costly as defiance. As one senior diplomat puts it: “India’s strategy is not to choose sides—but to keep all doors open.”

If successful, this crisis could turn into an opportunity—pushing India to diversify faster and deepen cooperation with US energy suppliers, while negotiating from a position of self-interest, not subservience.

—The writer is a Senior Research Officer at Chennai Centre for China Studies. Her research interests constitute China-WANA (West Asia and North Africa) relations and human rights

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