India’s Head Start on Russian Crude Threatened by Rising Competition – Explained

A rise in demand from Southeast Asian nations, including the Philippines, Thailand, Indonesia and Vietnam, is intensifying competition for limited Russian crude, tightening availability and raising the risk of higher costs.

Upon easing sanctions on Russian oil by the United States, Indian refiners went on a buying spree, buying about 60mn barrels of Russian oil for delivery next month, following the US waiver on March 10 that allowed India to buy limited quantities of Russian oil was a temporary step aimed at easing pressure on global energy supplies during the ongoing Middle East crisis. The measure was subsequently expanded to include other countries and updated to allow purchases of crude already at sea before March 12.

The South Asian country depends a lot on oil from other countries. After Russia invaded Ukraine in early 2022, it became a major buyer of cheap Russian crude oil. But India cut back on its purchases a lot at the end of last year because of pressure from the US. Instead, it bought barrels from Saudi Arabia and Iraq, most of which got stuck in the Persian Gulf when the war broke out.

However, other countries soon followed the shift, intensifying competition.

US Permitted Purchase of Russian Oil

White House press secretary Karoline Leavitt, while responding to a question on the US issuing a 30-day waiver to India to purchase Russian oil in the backdrop of the escalating West Asia conflict in a press conference at the White House on March 10, said that President Donald Trump, Treasury Secretary Scott Bessent and the whole national security team "came to this decision because our allies in India have been good actors and have previously stopped buying sanctioned Russian oil", reported PTI.

"So as we work to appease this temporary gap of oil supply around the world because of the Iranians, we have temporarily permitted them (India) to accept that Russian oil. And this Russian oil was already at sea. It was already out on the water. So this short-term measure, we do not believe it will provide significant financial benefit to the Russian government at this time," PTI quoted Levitt as saying.

According to a March 5 report published by Associated Press, Asia is the most exposed as it relies heavily on imported fuel, much of which passes through the Strait of Hormuz, the narrow route that carries a fifth of the world’s oil and liquefied natural gas (LNG) trade.

Around 13mn barrels of oil moved through this corridor daily in 2025, Asscociated Press reported citing Kpler, accounting for roughly a third of global seaborne crude supplies.

Almost a fifth of the world's LNG trade also goes through the strait at the same time. According to the US Energy Information Administration, more than 80% of this LNG was sent to Asia in 2024. This shows how much the region depends on the route. 

Implications for India

With the peak summer demand coming up along with cascading transport, agriculture and cooling needs, steady crude flows will be vital. A tighter oil market could push up import bills, potentially widening the current account deficit and adding pressure on the rupee.

It further strains the efforts of Reserve Bank of India to stabilise the currency amid global volatility.