India Expands Russian Oil Reliance as Strategic Reserve Gap Widens
India's underground strategic petroleum reserves hold just 39 million barrels of crude oil — equivalent to eight days of national consumption — a gap that has prompted the government to reportedly ask state-owned Oil and Natural Gas Corp to build a new reserve site at an estimated cost of $1.6 billion, according to an analysis published Tuesday (2026-06-23).6
India's vulnerability matters in the context of its surging Russian crude imports. When European countries began restricting Russian oil purchases following the February 2022 invasion of Ukraine, some 2.6 million barrels per day of crude previously destined for European refiners became available at a discount. India seized that opening, and its purchases have grown steadily since.5
Russia now expects its total oil exports to reach 240.1 million tons in 2025, up from a previous forecast of 229.7 million tons, according to revised government projections — a revision that reflects Moscow's confidence in sustained Asian demand even as Western markets remain largely closed.1
The structural shift in Russia's export destinations has been comprehensive. Russian gas now makes up just 18% of European Union imports, against 45% in 2021, while oil imports have fallen to roughly 3% from around 30%. Coal exports to Europe collapsed similarly: by 2024, Europe accounted for only 13% of Russia's coal shipments, almost entirely absorbed by Türkiye rather than EU member states. India's absorption of Russian coal exports rose from about 9.1 million short tons in 2020 to about 24.8 million short tons in 2024.1,2
For India, the appeal of Russian crude comes down to price. Urals crude was trading at $64.42 a barrel on Wednesday (2026-06-24), while ICE Brent crude front-month was at $76.62, giving Indian refiners a significant discount against the international benchmark — a spread they have been capturing at scale. With reserves covering only eight days of consumption, price sensitivity in New Delhi's procurement decisions is acute.6
The government's response to the reserve shortfall extends to a broader ambition. Australia, an IEA member that has consistently struggled to hold reserves equal to the agency's 90-day standard, plans to spend approximately $7 billion on expanding its fuel stockpile. India's $1.6 billion reserve expansion is modest by comparison, reflecting both budget constraints and the difficulty of building underground capacity quickly.6
Russia's ability to sustain elevated oil export volumes is not without constraint. Production averaged 9.6 million barrels per day in 2023, a slight decline of 0.2 million barrels per day from 2022, and Russia agreed to contribute a 0.5 million barrel per day cut to the OPEC+ alliance's total voluntary reduction of 2.2 million barrels per day. OPEC+ held an estimated 5.1 million barrels per day of spare capacity as of late 2023, about 5% of global demand.3
The geopolitical dimension adds a layer of risk for India's sourcing strategy. An Economist analysis argued that a US crackdown on India's Russian crude trade would most likely redirect those barrels toward China rather than remove them from global supply, keeping volumes in play but shifting routing and pricing. Washington's leverage through secondary sanctions makes Indian buyers cautious, even if they have not yet been directly targeted.5
Shadow fleet mechanics complicate enforcement. Between February 22nd and 26th, the Sarah, a 20-year-old tanker flagged in Hong Kong, switched off its AIS transponders to load Russian oil from smaller ships off the Omani coast — the kind of opacity that has made tracking Russian crude flows difficult even for well-resourced analysts.4
How far the Kremlin's oil revenues can run under these conditions depends partly on global supply shocks elsewhere. Robin Brooks of the Brookings Institution has noted that a prolonged closure of the Strait of Hormuz — which has already trapped around 15% of the world's oil in the Gulf — could hand Russia a windfall comparable in scale to the one it reaped in 2022. For India's refiners, the more immediate variable is whether Urals availability holds at current volumes and whether sanctions pressure escalates enough to shrink the discount that has made the trade so attractive.4