India’s Energy Policy and the Global Price Puzzle

New Delhi’s oil strategy is reshaping global markets and checking great-power rivalries.

Energy has always been the invisible current of civilisation, powering economies and shaping empires. Today, its most visible form is crude oil, not just a tradable commodity, but the fulcrum on which global politics, economic stability and power balances rest. On this fulcrum, India has become indispensable. It is both a colossal consumer, sustaining the needs of 1.4bn people, and the world’s fastest-growing major economy. That dual role makes one question unavoidable: what if India stopped buying Russian oil? The answer is more than a matter of statistics. It is a test of the stability of the global energy order.

This balance has been continuously challenged by U.S. President Donald Trump. His tariff policy unwittingly recalls the cruel ploys of a predatory usurer in a village where prosperous farmers arranged for canal water to reach the fields of marginal farmers to ensure prosperity for the whole village. The greedy usurer despised this and, under cover of darkness, sent his henchmen to cut the small embankments and channels created, ruining the crops of marginal farmers, entrapping them in a web of exploitation.

Prime Minister Narendra Modi’s foreign policy has made it clear that whether in international trade or strategic partnerships, relations will be conducted with respect and equality, regardless of the country involved. Indian interests will align with global welfare. While chairing the G20, India emphatically declared this in the Delhi Convention and extended invitations to countries of the African continent, guided by the ethos of ‘Vasudhaiva Kutumbakam’ (the world is one family).

India’s External Affairs Minister S. Jaishankar categorically rejected the arguments surrounding Trump’s tariff policy and the purchase of Russian oil. During a press conference in Moscow, he clarified, “We are not the largest buyers of Russian oil. That is China. We are not the largest buyers of LNG. That is the European Union. We are not the country that has seen the biggest surge in trade with Russia post-2022; I believe some countries in the south have. India’s decision to buy Russian oil aligns not only with national interests but also supports the efforts to stabilize the world energy market encouraged by the United States. In fact, the U.S. itself has been telling us for years to do everything possible to stabilize the global energy market. Incidentally, India also buys oil from the U.S., and this volume has been increasing. So frankly, we are quite surprised by the narrative the media is promoting.” Additionally, at the India-Russia Business Forum in Moscow, Jaishankar urged Russian companies to deepen collaboration with Indian firms, noting that India’s fast-growing economy and ‘Make in India’ initiative offer new opportunities. He invited Russian companies to participate in ensuring the supply of crucial goods such as fertilizers, chemicals, and machinery. 

The reality of India’s energy needs is that it imports nearly 90 percent of its crude oil. In the fiscal year 2023-24 alone, its import bill reached nearly 140 billion dollars. This figure alone demonstrates how even a slight rise in oil prices adversely impacts India’s economic structure. The U.S. remains comparatively resilient during the European crisis because it can print dollars, but countries like India must consider both the welfare of their citizens and balance of payments when making every decision. This wisdom and restraint define India’s distinctive policy.

The Ukraine war in 2022 shook the energy markets, driving crude oil prices up to 137 dollars per barrel. Western nations faced a dilemma—either completely ban imports from Russia and let prices soar or find a balanced solution. In this effort, the G7 set a price cap of 60 dollars per barrel. Concurrently, India pragmatically turned toward Russian oil. Before the Ukraine war, Russia’s share in India’s total imports was a mere 0.2 percent, which rose to 36-40 percent by 2024-25. This move was not only vital for India’s energy security but also proved essential for global price stability. Initially, even the U.S. appreciated India’s balanced stance. In 2022, U.S. Treasury Secretary Janet Yellen had said America “was happy that India is buying as much Russian oil as it wants… even above the cap.” 

India has upheld a policy of never shirking global responsibilities. In 2007, when India imported 12 percent of its crude oil from Iran and sanctions were imposed, India fulfilled its responsibility by stopping imports. Contrarily, China continues to import 1.4 million barrels daily from Iran, disregarding sanctions. The same is true with Russia, where China now accounts for nearly 40 percent of Russian exports. If India were to stop buying oil from Russia, Russia would sell even greater discounts to China, benefiting it and destabilizing global prices once again. India, through prudent balance, has averted such a scenario. 

India’s average daily crude oil import of two million barrels from Russia is a robust economic strategy. India currently receives an average discount of 3.5 dollars per barrel from Russia, saving approximately 10 billion dollars annually—directly benefiting India by roughly 25-30 thousand crore rupees. Conversely, if price stability were disturbed, India would need to spend an additional 10 billion dollars. Clearly, this policy is critical not only for India but also for stabilizing global markets. The Modi government’s energy and economic policies have instilled great confidence in India. This is why S&P Global upgraded India’s sovereign rating from ‘BBB(-)’ to ‘BBB’ and its short-term rating from ‘A-3’ to ‘A-2.’ This is not merely a numerical upgrade but a reflection of the world’s faith in India’s policy and management capabilities. India now stands on the global stage not just as a consumer but as a partner and policymaker. 

If India were to cease buying oil from Russia, it would affect not only India but the entire world. In 2024-25, Russia’s crude oil production averaged approximately 10.45 million barrels per day (BPD), about 10 percent of global supply, with around 4.5 million BPD exported. Should India stop buying Russian oil, various problems would arise: first, global prices would surge as crude oil could increase by up to 15 dollars per barrel due to supply shortage. Second, India’s economy would feel the strain. Its import bill would become unbalanced, impacting inflation and growth. Third, China would gain a significant advantage as Russia would naturally offer bigger discounts to China, strengthening its energy security.

Then, India would have to compete with already established consumers in the Middle Eastern market. Clearly, such a situation would cause imbalance not only for India but for the entire world.

To return to our village analogy, India has made it clear that it will not tolerate the whims of global bullies, just as the village’s driver did not allow the oppressive usurer’s tricks to succeed. Today, India is neither completely aligned with the West nor blindly imitates the East. It has woven a balancing bridge with its decisions, which, if broken, will undoubtedly cause massive turmoil in the global energy market. Our choices are inspired by the welfare of its citizens, yet their impact is global. India is no longer just a consumer; it has become an indispensable pillar of the world energy balance.

(The writer is a senior Delhi-based journalist and political analyst.)