India Will Keep Buying Russian Oil, Finance Minister Says

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  Business and Finance on Fri, Sep 05th, 2025 by Bloomberg L.P.

India Signals No Change in Russian Oil Purchases, Finance Minister Reaffirms Energy‑Security Strategy

In a stark reminder that geopolitics and energy markets will remain intertwined this year, India’s Finance Minister Nirmala Sitharaman told a press conference on September 5 that the country will continue to buy Russian crude. The announcement came amid a backdrop of intensified sanctions on Russia by the United States and European Union, a tightening of global financial‑sanctions regime, and a volatile oil market that has seen prices swing between $70 and $90 per barrel over the last six months.

Key Takeaways from the Statement

• No Abrupt Cut in Russian Oil – Sitharaman made it clear that India is “not planning a sudden or sweeping exit” from Russian imports. She explained that the country’s energy needs are growing, and Russian crude remains an attractive price point for India’s oil and refining sector.
• Compliance with International Sanctions – While India will not break the sanctions regime, Sitharaman emphasized that all transactions will be conducted under the existing “dual‑control” and “non‑coercive” guidelines set by the Indian government and the Reserve Bank of India.
• Diversification of Supply – India is simultaneously expanding imports from Saudi Arabia, Iraq, and the United Arab Emirates, as well as looking at increased purchases from the United States. The minister said that diversification is an ongoing objective, but Russia will remain a key partner for now.
• Domestic Impact – The Finance Ministry stated that the continued procurement of Russian crude will help keep India’s refined‑fuel prices stable for consumers. Sitharaman pointed to the “critical role of foreign exchange hedging” to shield Indian refineries from sudden price spikes.

The Bigger Picture: India’s Oil Basket and Geopolitical Tensions

India’s oil import mix has been under scrutiny for years, and the latest statements from the finance ministry have come at a time when the country’s dependence on Russian oil has surged. According to data from the Indian Ministry of Petroleum and Natural Gas, India’s imports from Russia climbed from about 6.5 million barrels per day (bpd) in 2023 to roughly 7.2 m bpd in 2024, making Russia the country’s third‑largest supplier behind Saudi Arabia and the UAE.

Sitharaman cited the “price advantage” as a primary reason for the sustained purchases. Russian oil, priced in U.S. dollars but often transacted in local currencies (Russian ruble, Indian rupee, or euros), tends to be priced at a 30‑50 pound per barrel discount relative to the benchmark Brent crude, especially during periods of geopolitical tension. That discount has been a decisive factor for many Indian refineries, which operate on thin profit margins.

In addition to the price advantage, India has been negotiating favorable payment terms with Russian energy firms. While the United States has imposed sanctions that target specific Russian entities, India has largely refrained from adding Russian companies to its own sanctions list. Instead, it has adopted a “non‑coercive” policy that prohibits only transactions with sanction‑listed entities but leaves other commercial dealings open.

International Reactions

The statement has elicited mixed reactions worldwide. The U.S. Treasury Department issued a brief note expressing “concern” that India’s continued purchases might undermine its own sanctions regime. A spokesperson for the U.S. State Department said the U.S. will “continue to monitor India’s compliance with sanctions.” In contrast, Russia’s Foreign Ministry released a statement thanking India for its “strategic partnership” and reaffirmed its commitment to the bilateral energy trade.

Saudi Arabia’s Minister of Energy, Prince Abdulaziz bin Salman, welcomed the announcement, noting that India’s diversified approach benefits the wider global market by preventing price shocks. He stated that “India’s decision to maintain a stable supply chain with Russia is understandable given the geopolitical complexities.”

Implications for Indian Finance and the Oil Market

The Finance Ministry’s insistence that the policy will not change in the near term signals a clear stance on the trade-off between economic interests and political pressure. From a finance perspective, the continued purchase of Russian crude will require careful management of foreign‑exchange risk, as transactions are frequently denominated in multiple currencies. The Reserve Bank of India has issued guidelines urging banks to assess sanctions exposure for clients engaged in energy trade.

Oil market analysts have highlighted that Indian imports of Russian oil will likely remain a significant component of global demand for the remainder of the year, especially as the OPEC+ alliance holds its meetings in the coming months. The OPEC+ group is expected to address the question of oil output cuts and the implications for price stability, a topic that directly impacts Indian refineries and downstream consumers.

Follow‑Up Stories

The Bloomberg article links to several other pieces that provide additional context:

1. “India’s Energy Strategy in a Post‑Pandemic World” – A detailed analysis of how India’s energy mix has evolved over the last decade, highlighting the role of imported oil, natural gas, and renewables.
2. “Russia‑India Oil Trade Under Sanctions: A Legal Review” – An examination of the legal framework that governs bilateral oil trade amid sanctions, including the “dual‑control” mechanism that the Indian government employs.
3. “Global Oil Prices Edge Higher Amid Supply Concerns” – A snapshot of recent oil price movements, which show that Brent crude has fluctuated between $70–$80 per barrel, while Russian exports are priced around $45–$50 per barrel, underscoring the discount advantage.

Conclusion

Finance Minister Nirmala Sitharaman’s statement that India will keep buying Russian oil signals the country’s commitment to an energy‑security strategy that prioritizes stable supply and cost competitiveness. While the decision has raised eyebrows in Washington and Brussels, the Indian government maintains that it can navigate the sanctions landscape without compromising its strategic energy partnerships. The coming months will test the resilience of this approach, as global oil markets continue to grapple with geopolitical uncertainty, supply constraints, and shifting consumer demand.