Economic Incentives Trump Political Neutrality in India’s Crude Procurement Reality

India’s crude oil procurement in 2025 demonstrated that economic incentives can significantly influence energy sourcing decisions despite official political neutrality on supplier preferences. While US crude imports to India increased by 65.6% to $8.2 billion during April-December 2025, Russian crude imports fell by more than 17%, declining from $40 billion to $33.1 billion in the same period.
December 2025 data illustrates this economic reality. Russian crude shipments to India totaled $2.71 billion, down 15.15% from $3.2 billion in December 2024, making Russia the only supplier among India’s top five to experience negative growth. This occurred despite India’s policy of not issuing official directives on supplier preferences.
Other major suppliers gained market share driven by economic factors. Saudi Arabia posted remarkable growth of 61%, supplying crude valued at $1.75 billion in December 2025. The United States recorded a 31% increase to $569.30 million. Iraq contributed $2.37 billion, up 4.56%, while the UAE delivered $1.65 billion, reflecting a 6% annual rise.
The economic incentives shifted dramatically with the US imposition of a 25% punitive tariff on Indian goods on August 27, 2025, specifically targeting purchases of sanctioned Russian petroleum. This tariff fundamentally altered the cost-benefit analysis for Indian refiners, even without government directives. Russian crude imports declined from $3.62 billion in July 2025 to $2.71 billion in December 2025.
India’s comprehensive crude oil imports from all sources totaled $11.29 billion in December 2025, up 9.1% from $10.34 billion in December 2024. Cumulative imports for April-December 2025 reached $105.10 billion, compared to $109.33 billion in the corresponding period of 2024. Officials emphasize that economic considerations within the framework of energy security guide procurement.