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India emerges as Russia’s key energy partner, offering stable ties, as China’s leverage and engagement show signs of strain
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Russia’s post-oil survival strategy is undergoing a decisive shift. As Urals crude hovers around US$53 per barrel, well below the fiscal breakeven of US$69.70, Moscow is under immense pressure. While China played a key role in absorbing Russian crude oil in the early years of sanctions, the limitations of that partnership are becoming evident. However, Moscow’s twin-track energy strategy is now encountering friction, especially as China diversifies its energy sources and toughens its bargaining stance on LNG. In this context, New Delhi is emerging both as a major buyer and Russia’s most strategic energy partner.
Since 2020, China has been Russia’s most important energy customer. In 2024, Russia became China’s largest crude supplier, with volumes reaching over 108 million metric tons (MMT), 20–22 percent of China’s total oil imports. Yet this relationship is tilted heavily in Beijing’s favour.
India’s crude imports from Russia reached near 2 million barrels per day in April 2025, marking a two-year high and solidifying India as Russia’s largest oil buyer.
Projects such as the Power of Siberia 2 pipeline, which could send 50 billion cubic meters of gas to China annually, are stalled. This is in contrast to the relative success of Russia's crude oil exports, which continue to find stable markets in China─albeit at steep discounts─and increasingly, in India.
China is demanding gas prices to match Russia’s domestic levels, far below the rates Moscow once charged European buyers. While Russian LNG exports to China rose 3.3 percent in 2024 to 8.3 MMT, Russia still trails Australia and Qatar in Beijing’s LNG hierarchy.
Chinese firms such as CNPC hold major stakes in Russian energy ventures, including 20 percent in Yamal LNG and 10 percent in Arctic LNG 2. This financial leverage enables China to negotiate steep discounts. With Urals crude being sold to China at US$53–61 per barrel, Beijing’s dominant position erodes Moscow’s strategic autonomy.
As China increasingly leverages its dominant position in this scenario, India has quietly expanded its role through a commercially pragmatic and mutually beneficial approach. As of early May 2025, India’s crude imports from Russia reached nearly 2 million barrels per day (mb/d) in April, marking a two-year high and solidifying India as Russia’s largest oil buyer.
India’s refining sector has turned this partnership into a strategic advantage. With robust diesel and jet fuel margins, Indian refiners not only import Russian crude but also re-export refined products to Europe, effectively cushioning the blow of Western sanctions on Moscow. This re-routing ensures a flow of foreign currency to Russia without the baggage of political concessions.
Unlike China, India does not seek equity stakes or dictate pricing. Its energy deals are commercial, transparent, and anchored in mutual benefit.
Unlike China, India’s energy deals are commercial, transparent, and anchored in mutual benefit. Even amid global scrutiny, Indian refiners and Russian insurers are coordinating marine insurance coverage to keep oil flowing, demonstrating the adaptability between the two eastern powers, Russia and India, bypassing the traditional Western-dominated systems.
Since the onset of Western sanctions in 2022, India’s imports of Russian crude have surged over tenfold, with Russian oil now accounting for more than 30 percent of India’s crude basket, compared to near-zero before the Ukraine war. But the partnership is no longer limited to oil barrels. At the recent India-Russia Business Dialogue, six joint ventures were announced, spanning shipbuilding, pharmaceuticals, and critical minerals. One standout development is the collaboration on small modular reactors (SMRs).
As part of these SMR ventures, Maharashtra signed an MoU with ROSATOM to develop India’s first thorium-based SMR. This clean, flexible nuclear technology could diversify both countries’ energy portfolios, offering a hedge against the declining role of hydrocarbons.
This broader cooperation reflects a long-term vision: India is not just a consumer but a co-developer of strategic technologies that serve mutual interests beyond fossil fuels.
Russia’s oil production exceeded its agreed quota by 480,000 b/d in early 2024, prompting promises of compensatory cuts through 2025. Yet compliance has been patchy, unlike Iraq, which must cut 1.93 mb/d and Kazakhstan, 1.3 mb/d by June 2026.
Meanwhile, OPEC+ plans to increase production by 411,000 b/d starting May 2025, aiming to restore a total of 2.2 mb/d over time. These adjustments reveal internal strains, with Saudi Arabia calling for a reduction to stabilise prices, while Russia prioritises export volumes to sustain revenues.
Caught between short-term fiscal needs and OPEC+’s price goals, Russia struggles to shape the bloc’s direction. With oil market challenges increasingly driven by geopolitics, Moscow must now look beyond OPEC+, toward partners like India, for relief.
Russia’s Energy Strategy 2035 still favours hydrocarbons, allocating nearly 60 percent of investments to Arctic LNG expansion, targeting 140 million tonnes per annum (MTPA) from regions like Yamal and Gydan. Officially, Moscow aims to capture 20–25 percent of the global hydrogen market, but its focus remains on blue hydrogen, which leverages existing gas infrastructure, while green hydrogen lags.
India, by contrast, is placing its bets on green energy. With a US$2.5 billion National Green Hydrogen Mission and a target of 5 MMT of annual production by 2030, New Delhi is building a sustainable ecosystem.
India and Russia are exploring small modular reactors, with Maharashtra signing an MoU to develop India’s first thorium-based SMR, highlighting a shift beyond fossil fuels.
Russia’s energy pivot, necessitated by Western sanctions and China’s hardening stance, has positioned India as Moscow’s most strategic energy partner. Unlike China’s leverage-driven approach, India’s transactional, mutually beneficial energy ties have provided Russia with vital economic relief and market stability. The partnership now extends beyond oil, encompassing joint ventures in shipbuilding, pharmaceuticals, and advanced nuclear technology, signalling a shift toward long-term, sustainable cooperation. As Russia seeks to diversify its economic alliances and India pursues energy security and green innovation, their deepening collaboration is reshaping the global energy landscape.
Manish Vaid is a Junior Fellow at the Observer Research Foundation
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Manish Vaid is a Junior Fellow at ORF. His research focuses on energy issues, geopolitics, crossborder energy and regional trade (including FTAs), climate change, migration, ...
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