Examine how sanctions regimes on Russia and Iran are reshaping India's crude oil sourcing strategy. What are the risks of over-concentration on a single supplier?

India imports close to 87% of the crude it consumes, a dependence the Parliamentary Standing Committee has flagged as a structural energy-security vulnerability [1]. Sanctions on Russia and Iran have therefore not merely altered prices — they have redrawn India's sourcing map.

How sanctions are reshaping sourcing

• Discount-driven pivot: the post-2022 Western price-cap regime on Russia made discounted Urals crude attractive; Russia rose from under 2% of India's basket to its largest single supplier, crossing half of monthly imports at the 2026 peak.
• Alternative payment rails: settlement shifted largely to yuan, insulating the trade from dollar-clearing risk but routing it through a China-linked channel.
• Chokepoint de-risking: renewed Iran–US hostilities around the Strait of Hormuz forced rerouting — about 70% of crude now arrives outside the Hormuz route, up from roughly 55% [2].
• Widened basket: sourcing expanded to nearly 40 countries, with record UAE volumes and Venezuela's entry as a significant supplier [2].
• Thin buffers: strategic reserves of 5.33 MMT at Visakhapatnam, Mangaluru and Padur cover only about 9.5 days of crude needs [3].

Risks of over-concentration on one supplier

• Eroding bargaining power — discounts narrowed sharply through 2026, with import value rising far faster than volume [4].
• Secondary-sanctions exposure for Indian refiners, insurers and shippers on financial and shipping channels.
• Single-point supply shock: one sanctions tightening could strand a majority of the basket overnight.
• Strategic cost: yuan-settled dependence advances China's currency-internationalisation goals and dilutes India's image as an autonomous balancer.
• Fiscal and BoP volatility, since crude dominates the import bill [4].

India's basket is thus wider in breadth yet deeper in concentration — diversification of names without diversification of risk. The durable answer lies in expanding strategic reserves toward IEA-comparable cover, spreading long-term term contracts across the Gulf, Africa and the Americas, and cutting import intensity through ethanol blending, EVs and green hydrogen — advancing both SDG-7 and genuine strategic autonomy.