India’s oil import bill faces fresh pressure after the US Congress cleared legislation authorising tariffs of up to 100% on major buyers of Russian energy, threatening access to a crucial supply source as the Indian crude basket touched $126.88 per barrel on September 16. With Gulf supplies disrupted and alternative cargoes costing $130-140 per barrel, replacing Russian oil could prove challenging for refiners.
India imported Russian crude worth $28.32 billion in FY27 through July, accounting for nearly 45% of its total crude import bill of $63.32 billion, according to commerce ministry data. In FY26, Russian imports stood at $40.823 billion, representing 30% of the country’s $134.71-billion crude imports.
The Lindsey O. Graham Sanctioning Russia and Iran Act cleared the US House on September 16 by a 262-159 vote, following Senate approval in August. It now awaits President Donald Trump’s signature. The legislation empowers him to impose tariffs of up to 100% on the five largest buyers of Russian oil or gas.
Abu Dhabi-based commodity analyst Natalia Katona said, “India has made it clear through the statement of India’s foreign minister that its national energy security comes first, and that is the most important signal to the US administration right now.”
“India imported 2 million b/d of Russian crude in August, around 45% of its total imports of 4.7 million b/d. Replacing that volume is a huge ask when Brent is trading around $104/bbl and Gulf supplies remain disrupted,” Katona said.
“Indian refiners already pay $130-140/bbl for physically delivered oil cargoes, and Russian crude remains the cheapest option even with Urals trading at a premium of $8/bbl to ICE Brent,” she said.
On potential tariff implementation, Katona said, “Even if president Trump signs the bill, I don’t expect him to impose these tariffs immediately. My view is that he will use the threat as bargaining power in trade talks.”
Kpler data show Russian imports reached around 2.7 million barrels per day (mbpd) in June-July, exceeding 50% of India’s crude intake.
Sumit Ritolia, Modelling Refinery and Oil Markets, Kpler, said, “Russian crude has effectively become an important supply hedge for Indian refiners, reducing their exposure to disruptions across traditional Middle Eastern supply routes.”
“Replacing Russian crude at current volumes would be challenging or impossible. A rapid curtailment of Russian flows to India or Asia could therefore have implications well beyond trade patterns; it will further tighten balances and put upward pressure on prices,” Ritolia said.
Praveen Rai, Director, Grant Thornton Bharat, said the International Energy Agency projects global supply to decline by 5.7 mbpd to 100.7 mbpd in 2026, with over 10 mbpd of Gulf production offline in August. Global demand is expected to contract 2.5 mbpd.
On alternative supplies, Rai said, “From a cost and logistics standpoint, the most attractive substitutes are likely to remain Iraq, Saudi Arabia, and the UAE, with Iraq being the closest replacement for Russian Urals because its medium-sour grades closely match the requirements of Indian refiners.”
He added, “In the medium term, diversification rather than complete replacement is likely to remain India’s preferred strategy, balancing energy security, crude quality requirements, and commercial competitiveness.”