Israeli and U.S. strikes on Iran, followed by Iranian retaliatory attacks, have choked Middle East oil flows and driven global prices sharply higher. Iran’s closure of the Strait of Hormuz, through which roughly 20% of the world’s oil and LNG transits, along with missile and drone strikes on Gulf shipping, has effectively halted tanker traffic from key export terminals. Over a dozen vessels have reportedly been hit or damaged in recent days. In response, major Gulf producers have curtailed output, including disruptions at the UAE’s Ruwais refinery, Qatar’s LNG shipments, and Saudi oil flows. The resulting supply shock prompted the IEA to call for a record 400 million-barrel release from strategic reserves, even as oil prices briefly surged above $100 per barrel amid fears of a prolonged crisis.
Why Is India Particularly Vulnerable to Energy Supply Disruptions?
India is especially exposed to Gulf supply shocks. Its refineries process about 5.6 million barrels per day, roughly 40% of which normally comes via the Strait of Hormuz. India holds only about 20–25 days’ worth of crude stocks (some estimates cite ~25 days of current demand coverage), far less than China’s six months of reserves.
As of January, the Middle East accounted for about 55% (2.74 million bpd) of India’s crude imports—the highest share in recent years—partly because New Delhi had been reducing cheaper Russian supplies under U.S. pressure. Oil Minister Hardeep Puri told Parliament that India’s buffer stocks can cover about 74 days’ demand, but independent sources noted actual effective reserves are closer to 20–25 days.
The Ministry of Petroleum has vowed to “take all necessary steps” to ensure fuel availability and price stability. In practice, India’s strategy is now to diversify suppliers in response to shifting market conditions.
How Is India Pivoting Back to Russian Oil Supplies?
With Gulf flows effectively constrained, Indian refiners moved quickly to secure alternative crude, notably from Russia. Industry sources report that roughly 9.5 million barrels of Russian oil are already at sea near India, ready to be redirected to its ports within weeks.
State refiners, including Indian Oil, BPCL, HPCL and MRPL, have reportedly “snapped up” at least 20 million barrels of Russian Urals and ESPO crude held on tankers. Reliance Industries alone arranged about 6 million barrels of Russian oil for March delivery. Hindustan Petroleum (HPCL), which had paused imports since last year, is reported to have placed orders for two Aframax cargoes just before February 28, resuming purchases at a discounted price.
These developments follow a sharp drop in Russian imports in January to placate Washington. January flows were only ~1.1 m bpd, about 21.2% of India’s total crude, the lowest Russian share since late 2022. By February, however, Russia’s share had rebounded toward 30%. In effect, refiners reversed earlier restraint: as one trader noted, “Indian refiners are back in the market.” Some refiners have even begun drawing on Russian cargoes stationed offshore to compensate for disrupted Gulf supplies.
Did the United States Temporarily Ease Sanctions on Russian Oil for India?
Faced with a tightening global supply, the United States briefly softened its position. On March 5–6, 2026, the U.S. Treasury issued a 30-day license allowing Indian refiners to purchase Russian crude loaded onto tankers by March 5 and delivered by April 4.
Treasury Secretary Scott Bessent described the move as a “temporary exemption” designed to prevent a global supply shock by allowing stranded Russian oil to reach the market. He emphasised that the measure was a short-term “stopgap” and would “provide no benefit to the government of Russia.”
The waiver was narrowly defined, covering only cargoes already in transit and set to expire at 12:01 a.m. EDT on April 4, underscoring that this was not a broader relaxation of sanctions. Nevertheless, it marked a notable shift from Washington’s earlier stance, effectively granting India limited flexibility to source Russian crude during the crisis.
How Has the Indian Government Responded to the Waiver Issue?
Indian officials moved quickly to reassure domestic audiences. Energy Minister Hardeep Puri and industry leaders emphasised that refinery operations remained stable, supported by diversified supply routes. Puri stated that oil imports were “in full flow from all non-Hormuz routes” and that India’s energy needs were being “fully met.”
The government also downplayed the significance of the U.S. waiver. The Press Information Bureau clarified that the U.S. waiver was not needed—India would continue buying from Moscow “even in February 2026”—and called the whole issue a non-controversy.
Why Are Indian Refiners No Longer Getting Bargains on Russian Oil?
Crucially, the renewed surge in Russian imports has come at market prices rather than the steep discounts India enjoyed in 2023–25. Prior to the Iran crisis, Russian Urals crude traded at a discount of roughly $10–$13 per barrel to Brent for Indian buyers.
By contrast, Indian refiners now report paying near parity with global prices. Three trader sources said Urals bound for India in Mar–Apr were fetching $4–$5 per barrel above Brent. Reliance’s recent 6-million-barrel purchase, for instance, was priced close to flat Brent. In effect, the deep discounts that once made Russian oil attractive have largely disappeared.
Market conditions explain this shift. Since late February, Brent prices have risen by roughly 25%, while Russian crude benchmarks have surged even more sharply. At the same time, strong global demand for non-Gulf supply has tightened availability. As one industry source observed, “availability of molecules is now the issue, not price.”
Russian officials have also acknowledged rising demand, noting that the conflict has driven a significant increase in interest in Russian energy exports.
In effect, India’s return to Russian crude no longer reflects opportunistic bargain-hunting, but a strategic adjustment to supply disruption. With Brent above $100 and demand for non-Gulf barrels surging, the steep discounts that once defined India’s Russia trade have largely disappeared. What remains is not a cheap alternative, but a flexible one.
This marks a broader shift in India’s energy strategy, from price optimisation to supply security under conditions of geopolitical stress. As long as the Strait of Hormuz remains unstable, New Delhi’s energy resilience will depend less on securing discounts and more on maintaining diversified and politically viable supply lines, even at higher cost. In that sense, the bargain may be over, but the relationship endures under new terms.