India’s sprawling oil sector, long a linchpin of the country’s economic engine, is facing a double whammy this November. On one front, the nation’s major refiners are pulling back from Russian crude, a move spurred by a tangle of international sanctions and escalating tariffs. On the other, petrol pump dealers in Gujarat are raising the alarm over mounting losses and technical headaches linked to the government’s push for ethanol-blended fuel. Together, these developments are reshaping the landscape for India’s energy suppliers and consumers alike, with ripple effects felt from the corridors of global trade to the dusty forecourts of local petrol stations.
According to reporting by Bloomberg, five of India’s largest oil refiners have taken the unusual step of skipping Russian crude orders for December 2025. This abrupt shift follows the United States’ decision to double tariffs on all Indian imports to 50% in August, and the imposition of tough sanctions last month on Russian oil giants Rosneft PJSC and Lukoil PJSC. As the world’s third-largest oil importer, India’s pivot is significant—and fraught with implications for both its energy security and its delicate diplomatic balancing act.
For much of the past few years, India has leaned heavily on discounted Russian oil, which made up a hefty 36% of its crude imports in 2025. The appeal was obvious: lower prices, reliable supply, and a chance to keep the nation’s energy bill in check. But Washington’s growing impatience—and allegations that Indian purchases were indirectly funding the Kremlin’s war effort in Ukraine—have forced a rethink. “Their caution may be partially due to trade negotiations between New Delhi and Washington,” noted a source familiar with the matter, as cited by Bloomberg. President Donald Trump himself added fuel to the fire, declaring this week that the two countries were getting “pretty close” to a deal, with India pledging to buy more American crude as part of the ongoing talks.
In this climate, only two processors—Indian Oil Corp. (IOC) and Nayara Energy Ltd.—have dared to buy Russian crude for December. IOC, wary of running afoul of sanctions, has stuck to non-sanctioned sellers. Nayara, partly owned by Rosneft, continues to rely on Russian barrels, but it’s increasingly an outlier. The spot market is awash with Russian cargoes from non-sanctioned suppliers, offered at discounts of $3 to $4 a barrel. But Indian buyers are hesitant, citing a “lengthy and complicated due-diligence process” to ensure no sanctioned entities are involved in the supply chain, according to industry insiders quoted by Bloomberg.
The search for alternatives is already underway. IOC has sought to secure as much as 24 million barrels from the Americas for delivery in the first quarter of 2026, while Hindustan Petroleum has snapped up 4 million barrels of US and Middle Eastern grades for January arrival. State-owned processors aren’t stopping there. At an industry conference in Abu Dhabi last week, executives from Indian oil companies met with Saudi Aramco and Abu Dhabi National Oil Co., walking away with fresh supply assurances to help plug the looming gap left by Russian barrels.
But as the nation’s big refiners scramble to adapt to shifting geopolitics, a very different crisis is brewing at the retail end of the petroleum pipeline. In South Gujarat, petrol pump owners are up in arms over the government’s E20 ethanol-blending policy, which mandates a 20% ethanol mix in petrol to cut carbon emissions and reduce dependence on imported oil. The policy, hailed as an environmental win by policymakers, is causing financial and technical headaches for dealers in the region’s humid coastal belt.
“If humidity increases even slightly or water enters the underground tanks, ethanol separates from petrol due to a chemical reaction,” explained Suresh Desai, President of the South Gujarat Petrol Pump Dealers Association, in an interview with The Blunt Times. “Ethanol, being heavier, settles at the bottom. When customers refuel, they get more ethanol and less petrol—damaging vehicle engines and causing complaints. Meanwhile, we lose lakhs in the process.”
This phenomenon is especially pronounced during the monsoon, when high humidity exacerbates ethanol separation. Dealers say the result is a cascade of problems: engine damage, angry customers, and financial losses that can run into the lakhs of rupees. The Association has formally written to Petroleum Minister Hardeep Singh Puri, demanding a suspension of E20 fuel sales during the four-month monsoon period. Their plea is clear: “Suspend the sale of E20 fuel for at least four months during the monsoon in these regions,” they wrote, highlighting the acute operational and financial crisis facing petrol pump owners.
Consumers, too, have voiced their frustrations. While ethanol is significantly cheaper than petrol (around ₹65 per litre), the government has not passed on the savings, keeping retail prices high despite the 20% ethanol mix. Many motorists complain of reduced mileage, engine corrosion, and performance issues—especially those driving vehicles made before 2018, which lack the BS6 engines designed to handle ethanol blends. “Customers come back complaining that their vehicles are jerking or stalling. Mechanics often blame water in petrol, but the real problem is ethanol separation. We are being blamed for something beyond our control,” said Nishith Desai, a petrol pump operator from Surat, in The Blunt Times.
The Association’s demands go beyond a temporary halt to E20 sales. They are also pressing petroleum companies to provide dual storage tanks—one for ethanol-blended petrol and another for pure petrol—so that dealers can cater to both types of customers. But oil companies, they say, are unwilling to bear the additional costs. “Petrol companies don’t want to spend a rupee,” Desai said bluntly. “They must provide infrastructure to handle ethanol safely. If someone wants petrol without ethanol, they should get it—and both fuels should have separate tanks.”
These twin crises—one shaped by global geopolitics, the other by local chemistry and climate—underscore the complex challenges facing India’s energy sector as it navigates a rapidly changing world. With international sanctions and tariffs squeezing traditional supply lines, and domestic policies triggering unintended consequences on the ground, the country’s oil industry finds itself at a crossroads. How it adapts in the coming months will have far-reaching consequences for everyone from refinery executives in Mumbai to struggling petrol pump owners in Gujarat—and, ultimately, for the millions of Indians who depend on affordable, reliable fuel to power their daily lives.
