Why in News?

• Recently, the U.S. President Donald Trump imposed sweeping sanctions on Russia’s two largest oil companies — Rosneft and Lukoil — as part of escalating efforts to cut off funding for Russia’s ongoing war in Ukraine.
• The move has implications for global oil markets, India’s energy strategy, and the India–U.S. relationship.

What’s in Today’s Article?

• Background - Sanctions Amid Prolonged Conflict
• India’s Position and Compliance
• Economic and Diplomatic Fallout
• International Reactions
• Strategic Implications for India
• Way Forward
• Conclusion

Background - Sanctions Amid Prolonged Conflict:

• The Russia–Ukraine war, now in its fourth year, continues to strain global diplomacy and energy markets.
• The new U.S. sanctions target Rosneft and Lukoil, responsible for over 5% of global oil output, contributing over 5 million barrels per day (mbd) globally, including 2 mbd in seaborne exports.
• The U.S. Treasury has given companies time till November 21 to wind down transactions with these entities, to curb Russia’s oil revenue, which funds nearly one-fourth of its federal budget and sustains the war effort.

India’s Position and Compliance:

• India’s position:
  • India, the second-largest buyer of Russian crude after China (with over 35% of total imports sourced from Russia in 2025), faces pressure to reduce imports.
  • Historically, India avoided oil imports from Iran and Venezuela after similar U.S. sanctions, signalling a possible precedent.
  • President Trump claimed India has agreed to reduce oil purchases from Russia to “almost nothing” by year-end.
  • The Indian PM has reportedly assured cooperation while balancing India’s energy security needs.
• Private refiners’ response:
  • Reliance Industries, operating the world’s largest refinery at Jamnagar, plans to halt or reduce imports, including its long-term deal with Rosneft (approx. 500,000 barrels/day).
  • Nayara Energy, partly owned by Rosneft, has remained silent but is expected to adjust supply chains.
• Public sector refiners’ review:
  • IOC, BPCL, and HPCL are reassessing trade documents to ensure no direct dealings with sanctioned firms.
  • However, some oil may still enter India via intermediaries, highlighting challenges in total disengagement.

Economic and Diplomatic Fallout:

• Trade tensions:
  • The U.S. has doubled tariffs on Indian goods to 50%, adding a 25% punitive duty on Russian crude imports.
  • India termed the move “unfair, unjustified, and unreasonable.”
  • Negotiations are underway for a bilateral trade deal that could reduce tariffs in exchange for reduced Russian oil imports.
• Impact on global oil markets:
  • Oil prices surged 3% following the sanctions.
  • The sanctions could disrupt global supply chains, particularly in Asia, where demand remains high.

International Reactions:

• Russia dismissed the sanctions, claiming “immunity” to Western restrictions and pointing out that its revenue comes mainly from taxing output rather than exports.
• Ukraine’s President Volodymyr Zelenskyy welcomed the move but urged for stronger measures to pressure Moscow into a ceasefire.
• The European Union is considering using frozen Russian assets to fund a €140 billion loan for Kyiv’s reconstruction.

Strategic Implications for India:

• India faces a policy dilemma - balancing strategic autonomy, energy security, and geopolitical alignment.
• The shift could push India to diversify oil imports from Middle Eastern and African suppliers.
• Maintaining stable ties with both Washington and Moscow will test India’s multi-alignment diplomacy.

Way Forward:

• Diversification of energy sources: Strengthen ties with Gulf nations, the U.S., and Africa for stable supplies.
• Negotiated flexibility: India should seek exemptions or phased compliance from U.S. sanctions.
• Strategic oil reserves: Enhance domestic reserves to cushion against supply disruptions.
• Diplomatic balancing: Continue pursuing strategic autonomy within frameworks like QUAD, SCO and BRICS.

Conclusion:

• The latest U.S. sanctions signify a sharp escalation in the economic front of the Ukraine conflict, with wide-ranging repercussions for global energy markets and India’s foreign policy.
• For India, aligning with global sanctions while preserving energy security and strategic independence will remain the central challenge in the evolving multipolar world order.