Economy

India-Russia energy partnership is here to stay, likely to outlast Ukraine war

As India’s fuel demand is expected to rise substantially fuelled by a healthy pickup in economic activities, New Delhi is set to further increase oil imports from Moscow notwithstanding the price cap imposed by the G7 countries on Russian crude oil. Since the Russia-Ukraine war, India has been sourcing Russian oil at discounted prices. But analysts said that the price discount for India may continue even after the war.

India’s imports of Russian oil have been increasing steadily in the last one year, touching a record high of 1.6 million barrels per day (bpd) in February, up from 1.4 bpd in January.

About 35 per cent of India’s total oil requirements are now being sourced from Russia. It was less than 1 per cent before the Russia-Ukraine war.

“For Moscow the main advantage is clear, India is seen as not only a major upcoming hydrocarbon market but also fulfills a major geopolitical interest,” Oilrpice.com said.

Meanwhile, state controlled oil producer Rosneft, the largest in Russia and Indian Oil Corporation have signed an agreement to increase crude supplies while diversifying oil grades delivered to New Delhi.

The agreement was signed during Rosneft CEO Igor Sechin’s recent India visit.

The two oil majors also deliberated on ways to expand cooperation to strengthen the value chain in the energy sector.

Union Petroleum and Natural Gas Minister Hardeep Singh Puri earlier said that India which was buying crude from 29 countries prior to the war is now sourcing oil from 39 countries. “We are ready to buy from anywhere,” he said.

However, sources said that the two countries need to expedite the rupee-ruble payment mechanism for seamless bilateral trade.

“With bilateral trade increasing between the two countries, the payment mechanism has to be resolved..while policymakers have been working on it, it is yet to take off. We need to act fast,” an analyst with an industry body told India Narrative.

Last month, Russian ambassador Denis Alipov said that Indian banks have been cautious in dealing in a rupee-ruble payment system due to fear of “secondary restrictions” from the US.

“The vostro accounts have been opened. The mechanism of rupee-ruble trade has been established. It is now a matter for the banks to use it,” Alipov said, adding that the banks have been playing safe amid the sanctions. “It will take some more time for the knowledge that it is not at all detrimental for the Indian banking system to sink [in]. We are going to see an absolutely positive and expansion of the usage of this mechanism,” he said.

Also read: RBI sees need for ‘oil-proofing’ economy amid global shocks

India aims to step up domestic crude oil output to cut imports

Mahua Venkatesh

Mahua Venkatesh specialises in covering economic trends related to India and the world along with developments in South Asia.

Recent Posts

DRDO offers 28 indigenous weapon systems to military for emergency procurement

The Defence Research and Development Organisation has offered 28 of its designed and developed weapon…

6 hours ago

Eleven Nepali nationals being evacuated from Iran, expected to arrive in India tomorrow

Nepal Foreign Minister Arzu Rana Deuba announced that 11 Nepali nationals being evacuated from Iran…

6 hours ago

Tibetan leader highlights Tibet’s global relevance in London, urges youth to defend identity and history

On June 21, 2025 (BST), Sikyong Penpa Tsering from the Central Tibetan Administration received a…

7 hours ago

INS Teg concludes port call in Mauritius, boosts maritime security cooperation and bilateral ties

Strengthening maritime cooperation in the Indian Ocean Region, INS Teg, a frontline stealth frigate of…

9 hours ago

‘Call upon Canadian friends to deepen bilateral collaboration in countering terrorism, extremism’, Union Minister Hardeep Singh

Union Minister Hardeep Singh Puri paid tributes to the victims of the Kanishka bombing and…

10 hours ago

Pakistan: Baloch human rights group marks 3 months since illegal arrest of Mahrang

The Baloch Yakjehti Committee marked three months since the arrest of the organisation's leaders such…

11 hours ago