India should review Russian oil dependence and diversify imports, says former diplomat

Former diplomat DP Srivastava has said India should review its heavy dependence on Russian oil and diversify its import sources to safeguard energy security amid tightening US sanctions on Moscow’s oil sector.

“Diversifying sources of oil imports is good policy. Our dependence on Russia for 30-34% of our oil supplies needs to be reviewed,” he told CNBC-TV18.

His comments come after the US government imposed new sanctions on Russia’s two largest oil companies – Rosneft and Lukoil – To pressure Moscow to negotiate a peace deal with Ukraine.

The EU also announced its 19th package of sanctions, which includes a ban on imports of Russian liquefied natural gas (LNG).

Srivastava said the new sanctions are mainly aimed at Russia’s reluctance to meet US conditions for ending the war in Ukraine. However, he clarified that his target is not directly India. “Whether it is directly aimed at India or not is difficult to say at this stage,” he said.

Read here US sanctions on Russian oil giants unlikely to derail Indian refineries, industry experts say

“The measures block Rosneft and Lukoil’s assets in the US and prohibit transactions involving US persons or within US jurisdiction. They do not necessarily include sanctions against third countries working with them, as long as payments are made through US-controlled channels,” the US Treasury statement said.

Srivastava pointed out that these are not secondary sanctions, meaning foreign buyers like India can continue to buy Russian oil while avoiding US financial systems. However, he said the additional restrictions create a tense environment, making it “easier to negotiate in a more relaxed environment.”

Adding perspective on the market impact, Sumit Ritolia, principal research analyst at Kpler, called the latest move “one of the toughest restrictions ever imposed” on Russian crude oil flows to India.

“India is buying about 1.7 million barrels per day of Russian crude this year, and about 1.2 million barrels per day come from Rosneft and Lukoil. This will be a major disruption for Indian refineries, especially those working directly with Rosneft,” Ritolia said.

He said while public sector refiners (OMCs) have more diverse sources and trade flexibility – those that have long-term supply arrangements with Rosneft – could feel a stronger impact. “We expect near-term volatility in Russian barrel imports into India,” Ritolia said.

However, Ritolia believes Indian refiners are not without options. “There is enough crude oil coming from the Middle East, Nigeria, Brazil and Guyana. So availability is not a problem,” he said. “But the discounts offered by Russia are hard to replace – and this will make a difference in costs if India turns to other suppliers.”

For the full discussion, watch the attached video