Why in news?

India’s approach to energy security has steadily evolved from dependence on a few traditional suppliers to a more diversified and opportunistic sourcing strategy. Once heavily reliant on Saudi Arabia and West Asia for nearly two-thirds of its crude imports, India has progressively broadened its oil basket to balance geopolitical risks with cost advantages.

In recent years, Russia has emerged as a major supplier, reflecting New Delhi’s pragmatic diplomacy—leveraging global disruptions to secure discounted crude while maintaining ties across rival blocs.

Overall, India’s oil policy now prioritises flexibility, diversification, and economic prudence over fixed geopolitical alignments.

What’s in Today’s Article?

• West Asia as the Backbone of India’s Oil Imports
• Iran Sanctions and the Reshaping of India’s Crude Basket
• Iran Sanctions, Temporary Revival, and India’s Diversification Push
• Russia Emerges as India’s Largest Crude Supplier

West Asia as the Backbone of India’s Oil Imports

• Before 2005, India’s energy security rested overwhelmingly on West Asia, which supplied over 70% of its crude oil, led by Saudi Arabia, Iraq, Iran, Kuwait and the UAE.
• Although India gradually diversified its sources between 2005 and 2015—adding African suppliers like Nigeria and Angola and limited volumes from South America—West Asia remained dominant.
• Despite this gradual broadening, more than 60% of the crude oil imported in 2011-12 came from seven West Asian nations:
  • Saudi Arabia (About 17% of the overall basket),
  • Iran (11.3%), Iraq (10.5%),
  • Kuwait (7%),
  • United Arab Emirates (9%),
  • Oman (3.4%) and
  • Qatar (3.3%).
• African oil, mainly from Nigeria and Angola, formed a distant second, accounting for about one-fifth of total imports.

Iran Sanctions and the Reshaping of India’s Crude Basket

• India’s long-standing oil ties with Iran faced a major disruption after international sanctions tightened around Tehran.
• In June 2010, the United Nations Security Council imposed sanctions on Iran over concerns about its expanding nuclear programme.
• This was followed in 2011 by unilateral sanctions from the United States, including restrictions on Iran’s Central Bank and threats to penalise foreign banks purchasing Iranian crude.
• Under mounting external pressure, India began scaling down imports from Iran. As a result, Iran’s share in India’s crude oil basket declined sharply—from a double-digit level earlier to 7.1% in 2012–13, 5.8% in 2013–14, 5.7% in 2014–15, before a marginal rise to 6.2% in 2015–16.
• This phase marked a crucial turning point in India’s energy diplomacy, highlighting how geopolitical sanctions directly constrained sourcing choices despite economic considerations.

Iran Sanctions, Temporary Revival, and India’s Diversification Push

• The easing of sanctions on Iran in 2016, after compliance with the United Nations Security Council–approved nuclear agreement, briefly revived India–Iran energy ties.
• India increased crude imports from Iran to 12.7% in 2016–17, restoring Tehran’s position as a major supplier.
• However, this recovery was short-lived. After Donald Trump assumed office and reimposed US sanctions in 2017, Iran’s share in India’s oil basket declined again to just over 10% in 2017–18 and 2018–19.
• By 2019–20, India drastically reduced Iranian crude purchases by 91.8%, reflecting both sanctions pressure and a conscious diversification strategy.
• New Delhi increasingly sourced oil from the United Arab Emirates and the United States, reducing vulnerability to single-source shocks.
• At present, India’s oil import profile is far more diversified: 40–45% from the Middle East, 8–10% from Africa, and 10–12% from the Americas.

Russia Emerges as India’s Largest Crude Supplier

• A major shift in India’s oil import basket occurred in 2022, following Russia’s invasion of Ukraine in February that year.
• The conflict triggered sweeping sanctions on Moscow by the European Union and the United States, forcing Russia to redirect its crude exports at discounted prices.
• India and China—among the world’s largest oil consumers—continued buying Russian oil, guided by economic considerations rather than sanction regimes.
• Sharp Rise in Russian Oil Share
  • According to India’s Directorate General of Commercial Intelligence and Statistics (DGCIS), Russia became the largest contributor to India’s crude basket starting FY 2022–23.
  • Russia’s share jumped from less than 2% in 2021–22 to 21.6% in 2022–23, rising further to 35.9% in 2023–24 and 35.8% in 2024–25.
  • Currently, around one-third of India’s total crude imports come from Russia.
  • Importantly, Indian refineries were technically “well-suited” to process Russian crude, easing the transition.
• Economics of Discounted Russian Crude
  • The surge was supported by favourable pricing.
  • The price of Russian Urals crude fell from $79.41 per barrel in April 2022 to $66.49 per barrel in March 2025, improving refinery margins.
  • During this period, the shares of traditional suppliers such as Iraq, Saudi Arabia, and the UAE declined only marginally, indicating diversification rather than displacement.
• Why Russian Oil Is Hard to Replace?
  • As per analysts, cutting Russian oil imports would be “difficult, costly, and risky” for India.
  • Replacing Russian crude would require rapid sourcing from multiple suppliers at higher costs due to increased freight charges and weaker discounts.
  • Such substitution could compress refinery margins, raise retail fuel prices, fuel inflation, trigger political backlash, and strain refinery balance sheets and credit lines.