India Continues Russian Oil Imports Amid Waiver Expiry

India's Petroleum Ministry is allowing the country to continue importing Russian crude oil, even as a key US sanctions waiver has expired. This decision reflects a strategy to turn energy needs into a geopolitical advantage. It's driven by the pursuit of cost-effective energy and greater autonomy in a global market facing severe shipping route disruptions. These imports, guided by commercial sense, provide India with considerable leverage in foreign policy and energy security.

Waiver Details and India's Import Volume

The United States let a crucial sanctions waiver expire on May 16, which had allowed Indian refiners to receive Russian oil loaded before April 17 and trade with entities like Rosneft and Lukoil. Despite US pressure to reduce these purchases, India's imports have remained high, reaching near-record levels in April and projected at 1.9 million barrels per day in May 2026. The US Treasury has changed its waiver approach, partly due to importer demand for alternatives to dwindling Middle Eastern supplies. While the waiver's expiration creates some challenges, India's core import strategy, focused on consistent supply and economic viability, remains unchanged.

Global Supply Shocks and Rising Oil Prices

The global energy market is under significant strain, worsened by disruptions in the Strait of Hormuz, a key transit point for about half of India's crude oil. This has caused oil prices to surge, with Brent crude trading around $108-$110 and WTI near $103-$106 per barrel in mid-May 2026. The average Indian crude oil price has jumped to $111-$114 per barrel. Analysts warn of further price swings, citing record lows in global oil inventories.

India's Energy Security and Economic Impact

As India imports over 88% of its crude oil, it faces considerable risk from price hikes. A $10 increase in oil prices can reduce GDP growth by 0.1-0.2% and boost inflation by 0.2%. To mitigate this, India has diversified its oil sources to over 40 countries, reducing reliance on any single region, though the Strait of Hormuz remains a critical vulnerability. Historically, crude oil imports decreased by 3.3% in May 2025 compared to the previous year, showing how global events affect import volumes.

Indian Oil Companies Show Market Confidence

Major Indian Oil Marketing Companies (OMCs) such as Indian Oil Corporation, Bharat Petroleum, and Hindustan Petroleum show strong financial fundamentals. They report P/E ratios between approximately 4.2x and 5.8x, with market capitalizations in the hundreds of billions of Indian Rupees. This indicates sustained market confidence in their operational strength and strategic positioning, despite broader geopolitical pressures on the energy sector.

Geopolitical Leverage Through Energy Purchases

India's approach to Russian oil purchases transforms its high import dependence from a vulnerability into a source of geopolitical influence. By absorbing discounted Russian crude, India not only secures lower-cost energy but also helps stabilize global prices, benefiting other developing nations. This pragmatic strategy positions India centrally in negotiations with major energy exporters. The country's expanding import network and engagement with diverse suppliers are key to managing geopolitical risks and ensuring supply chain stability.

Risks: Secondary Sanctions and Diplomatic Strain

Despite championing energy security, reliance on Russian oil carries risks, particularly concerning evolving US sanctions policy. The expiration of US waivers exposes Indian refiners to potential secondary sanctions, which the Donald Trump administration has indicated it may enforce. This could complicate access to shipping and insurance markets, increasing operational costs and potentially forcing a costly, rapid shift away from Russian supplies. Reports suggest Indian oil companies are already facing daily losses estimated at ₹1,000 crore.

Persistent Vulnerabilities and Diplomatic Concerns

Over 50% of India's oil imports still transit the Strait of Hormuz, a persistent chokepoint vulnerable to regional instability. Furthermore, continued large volumes of Russian oil could strain diplomatic ties with Western allies concerned about isolating Moscow over its actions in Ukraine. This could potentially impact trade agreements or technology access in other sectors.

Future Outlook: Demand Growth and Import Reliance

Analysts forecast India will lead global oil demand growth for the next decade, with its import dependence rising to 92% by 2035, despite domestic production efforts. India's energy policy will likely involve carefully balancing affordability and security while navigating complex geopolitics. While current crude prices are around $111 per barrel, forecasts suggest a rise to $126.35 within 12 months. India's diverse suppliers and strategic engagement, including with Russia, are crucial for stability. Continued import reliance and geopolitical volatility around transit routes mean energy security will remain central to India's economic and foreign policy.