India, Russia Move to Resume Direct LNG Trade Amid Global Energy Volatility

India and Russia are preparing to resume direct sales of liquefied natural gas (LNG) for the first time since the Ukraine war, according to sources familiar with the matter cited by Reuters. The move comes as both countries seek to strengthen energy ties against the backdrop of rising global prices following tensions involving Iran, the United States, and Israel, and disruptions around the Strait of Hormuz.

Discussions were initiated during a meeting in New Delhi on March 19 between Russian Deputy Energy Minister Pavel Sorokin and India’s Petroleum Minister Hardeep Singh Puri. Sources indicated that a preliminary verbal understanding had been reached to begin formal negotiations, which could conclude within weeks if India proceeds. However, any agreement may face scrutiny over potential violations of Western sanctions.

India had earlier reduced its purchases of Russian crude while engaging with the United States on tariff-related issues under former President Donald Trump. Within months, however, New Delhi and Moscow renewed efforts to deepen cooperation in the energy sector.

Both sides have also agreed to increase crude oil supplies, which could account for at least 40% of India’s total imports in the near term. Since Russia’s invasion of Ukraine, India has already purchased approximately $44 billion worth of Russian crude, providing a significant economic lifeline to Moscow.

Energy Strategy Shifts Amid Crisis

The renewed talks come at a time of heightened global energy uncertainty following military escalations involving Iran. India has reportedly asked its importers to prepare for potential LNG purchases from Russia while simultaneously seeking sanction-related flexibility from Washington.

Officials said India is also engaging with multiple countries to secure stable energy supplies, including LNG. Notably, imports of Russian liquefied petroleum gas (LPG), which are not currently under sanctions, have continued uninterrupted.

Impact of Strait of Hormuz Disruptions

India’s energy strategy has been further influenced by disruptions in the Strait of Hormuz, through which nearly half of its oil and LNG supplies transit. Escalating tensions and threats to shipping routes have led to supply concerns, long queues at fuel stations, and localized shortages of cooking gas in some regions.

With Gulf routes facing uncertainty, demand for Russian energy exports to Asia has increased. Indian refiners reportedly ramped up orders shortly before the United States announced temporary relief measures for certain transactions.

A prolonged disruption in Middle Eastern supply chains could trigger broader economic challenges for India, including higher inflation, currency pressures, and rising external debt. A government note warned that export growth could slow by 2% to 4%, while wholesale inflation may increase by 0.3% to 0.7%.

Expanding Bilateral Engagement

Russia is also seeking to broaden its cooperation with India beyond energy. Discussions have included potential power transmission projects in remote regions and the expansion of direct aviation links between the two countries.

Russian Foreign Minister Sergey Lavrov recently noted that 96% of bilateral trade is now conducted in rupees and rubles, with faster transactions facilitated through Russian lender Sberbank.

A Long-Term Strategic Partnership

Former Indian Ambassador Ajay Malhotra said India’s approach reflects both its national interests and its longstanding relationship with Russia. He added that, as part of ongoing strategic engagement, India may continue to seek waivers or adjustments from the United States to maintain flexibility in its energy policy.