Context:
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India’s crude oil import strategy has evolved significantly from a heavy dependence on West Asian suppliers to a more diversified mix, with Russia emerging as the dominant supplier in recent years.
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Geopolitical shifts, sanctions, price dynamics, and refinery economics have collectively reshaped this import basket.
Key Highlights:
Historical Dependence on West Asia
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Traditionally, over 70% of India’s crude oil came from West Asian nations like Saudi Arabia, Iraq, Iran, Kuwait, and the UAE due to proximity, existing contracts, and abundant reserves.
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India also diversified into African (e.g., Nigeria, Angola) and South American (e.g., Venezuela) oil sources over the years.
Sanctions & Geopolitical Shocks
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UN sanctions on Iran in 2010s forced India to cut Iranian oil purchases significantly by 2015–16, reducing its share.
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Renewed global sanctions on Russia after February 2022 reshaped global crude flows, making Russian oil available at significant discounts.
Rise of Russian Crude in India’s Basket
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Russia’s share in India’s crude imports surged dramatically: from less than 2% in 2021–22 to approximately 36% by 2024–25, making it the single largest supplier.
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Discounted Urals grade crude, relative price advantages, and India’s refinery capability to process medium-sour grades facilitated this shift.
Diversification Beyond Traditional Suppliers
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Middle Eastern suppliers remain important, but their relative shares have declined as Russia rose.
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India has also increased imports from the United States in recent years, reflecting further diversification trends.
Stakeholders Involved:
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Ministry of Petroleum & Natural Gas
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Indian Oil Corporations and refiners (e.g., IOC, Reliance)
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Foreign supplier governments and oil producers
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Strategic partners in energy diplomacy
Significance / Concerns:
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Energy Security: A diversified basket reduces overdependence on any single region.
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Geopolitical Leverage: India balances relations with the Middle East, Russia, and Western nations.
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Economic Efficiency: Discounted Russian oil has helped manage global price volatility and domestic inflation.
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Sanction Risks: Reliance on sanctioned supplies exposes India to external pressure and compliance challenges.
Relevant Prelims Points:
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Crude Oil Basket: The mix of crude oil sources countries import; reflects energy security and geopolitical shifts.
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India’s crude import dependency is high (over 85% of total consumption) due to declining domestic production.
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Russian crude share rose to around 35% in 2025 from around 2% in 2020.
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Traditional suppliers—Iraq, Saudi Arabia, UAE—still contribute significant volumes, though less dominant than before.
Issue + Causes:
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Reasons for historical West Asia reliance: Geographic proximity, stable long-term contracts, infrastructure links.
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Drivers of shift: Western sanctions on Russia (post-2022), deep discounts on Russian oil, India’s strategic autonomy in energy sourcing.
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Refinery flexibility: Indian refineries can process varied crude grades, enabling supplier diversification.
Government Initiatives:
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Strategic partnerships with major oil producers.
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Energy diplomacy and long-term supply contracts.
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Enhancing refinery adaptability to varied crude types.
Benefits:
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Stabilized domestic fuel prices due to lower import costs.
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Mitigation of supply risks through diversification.
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Enhanced bargaining power in global energy markets.
Challenges:
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Exposure to Western sanctions and trade pressures.
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Political and diplomatic balancing in energy strategy.
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Logistics and compliance complexities in sourcing from distant suppliers.
Impact:
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Russia becoming India’s top supplier has geopolitical and economic implications, influencing foreign policy calibration and energy security planning.
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Rising U.S. crude share also signals emerging diversification in sourcing strategies.
Relevant Mains Points:
Conceptual Clarity:
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Energy Security: Availability, affordability, and sustainability of energy supplies crucial for economic stability.
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Refinery Economics: Processing different grades affects cost, product yields, and profitability.
Static + Policy Definitions:
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Indian crude import dependence recognises the lack of sufficient domestic reserves and growing energy demand.
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Urals grade: Benchmark for Russian crude blend frequently purchased by India for competitive pricing.
Way Forward:
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Continue diversification to reduce geopolitical risk.
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Expand renewable energy sources to ease hydrocarbon dependency.
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Strengthen strategic petroleum reserves.
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Enhance energy efficiency and domestic exploration.
UPSC Relevance (GS-wise):
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GS 2 (International Relations): Energy diplomacy and strategic autonomy
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GS 3 (Economy): Crude oil imports, global trade dynamics, energy security
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Prelims: Crude oil import sources, energy terms (Urals, import basket, diversification)