By K Raveendran
Escalating tensions between the United States and Iran are threatening to push global oil markets into another period of turbulence, but India has found an unexpected measure of protection in President Donald Trump’s decision to ease sanctions on Russian energy. The policy reversal, driven partly by Washington’s own need for Russian diesel, has given New Delhi valuable breathing space at a time when another oil price shock could seriously undermine its economic prospects.
The significance of the American decision extends well beyond the immediate relief it offers Indian refiners. It exposes the contradictions underlying Washington’s energy diplomacy, where geopolitical objectives are increasingly being subordinated to domestic economic pressures. Having penalised India for purchasing Russian crude, the Trump administration is now facilitating the return of Russian petroleum products to American markets, effectively acknowledging the economic realities that New Delhi has consistently invoked to defend its energy purchases.
Oil prices have climbed sharply as the confrontation with Iran threatens further disruption to supplies from West Asia. Brent crude has been trading around $110 a barrel, reflecting the continuing uncertainty surrounding production, shipping routes and the possibility of a wider military confrontation. Although markets have absorbed successive rounds of threatening rhetoric from Washington and Tehran, the prospect of sustained disruption to physical supplies has made the present situation considerably more serious.
For India, which depends on imports for more than 88 per cent of its crude requirements, the implications are particularly significant. Every sustained increase in international oil prices adds pressure to the import bill, complicates inflation management and potentially weakens the rupee. Higher energy costs also affect industrial production, transport, agriculture and household expenditure, making petroleum prices a critical variable in the country’s broader economic stability.
The Strait of Hormuz remains central to these concerns. Any renewed disruption to tanker movements through this strategic passage could tighten global supplies and increase freight and insurance costs. Even when sufficient crude remains available elsewhere, the additional expense of transporting it can undermine the advantages of alternative sourcing arrangements.
Against this background, Trump’s decision to waive key provisions of the Lindsey O. Graham Sanctioning Russia and Iran Act has provided India with an important reprieve. The legislation authorised punitive tariffs of up to 100 per cent against major purchasers of Russian energy, potentially exposing Indian exports to another round of American trade restrictions. The October 16 waiver has removed that immediate threat without permanently dismantling the sanctions framework.
The decision followed Washington’s extraordinary arrangement with Moscow to resume Russian diesel supplies to international markets, including the United States. The first shipment destined for America since 2022 has already left Russia’s Baltic port of Primorsk, underlining the practical significance of the policy reversal. The arrangement was announced as the Trump administration confronted soaring fuel costs ahead of the November midterm elections.
This development presents an unmistakable contradiction. Washington had sought to discourage India from buying Russian crude on the grounds that such purchases helped sustain Moscow’s war economy. Yet the United States has now found it necessary to facilitate Russian diesel imports to protect American consumers from rising energy costs. The distinction between geopolitical principle and domestic economic necessity has consequently become increasingly difficult to maintain.
India can reasonably argue that its own energy decisions have been guided by comparable considerations. Affordable and reliable petroleum supplies are indispensable to a developing economy supporting more than 1.4 billion people. New Delhi’s position has been that commercial purchases should reflect national requirements rather than automatically conform to the strategic preferences of another government.
The sanctions waiver strengthens that argument, although it does not eliminate the underlying diplomatic difficulties. Washington retains the authority to revive restrictions, and the American administration has indicated that the present arrangement should be viewed as a temporary pause. Indian policymakers therefore cannot assume that the current flexibility represents a permanent change in American attitudes towards Russian energy purchases.
Nevertheless, Indian refiners have gained greater confidence to continue sourcing Russian crude. Russia remains India’s largest oil supplier, having transformed its position in the Indian market since the invasion of Ukraine in 2022. Before that conflict, Russian crude accounted for only a marginal share of India’s imports. The availability of discounted barrels subsequently encouraged refiners to undertake a substantial restructuring of their procurement strategies.
Russian shipments to India have fluctuated considerably during 2026, reflecting changing discounts, shipping conditions and competition from Chinese buyers. Industry estimates place October imports at approximately 1.8 million to 1.9 million barrels daily, below the peaks recorded earlier in the year but still representing a substantial proportion of India’s requirements.
Reports suggesting that additional Russian cargoes could be redirected towards India from routes serving China have added to expectations of improved availability. However, such movements should not be interpreted as evidence of a wholesale diversion of Chinese supplies. Competition between the two Asian giants remains intense, while changing Arctic shipping conditions could make Indian destinations commercially more attractive during the approaching winter.
The crucial consideration is not merely whether India can secure additional barrels, but whether those supplies remain economically advantageous. Russian crude discounts have narrowed or widened according to market conditions, and higher freight charges can substantially erode the apparent savings. Refiners must also account for payment arrangements, insurance availability and the continuing uncertainty surrounding Western sanctions.
India’s energy strategy therefore requires greater flexibility rather than renewed dependence on a single supplier. The temporary American concession offers an opportunity to strengthen inventories, negotiate favourable contracts and preserve relationships with producers across West Asia, Russia and other regions. It would be unwise to interpret the waiver as a guarantee against future disruptions.
There is also a wider diplomatic opportunity. The removal of the immediate sanctions threat could improve the atmosphere surrounding India-US trade negotiations, which have been complicated by tariff disputes and disagreements over Russian petroleum purchases. Yet the underlying asymmetry remains: American policy can change rapidly according to domestic political requirements, leaving Indian commercial interests exposed to decisions made in Washington.
For New Delhi, the lesson is that energy security and strategic autonomy cannot be separated. The Iran confrontation demonstrates the dangers of excessive dependence on politically unstable supply routes, while the Russian sanctions episode illustrates the vulnerability created by extraterritorial economic restrictions. (IPA Service)
