India's warning to Washington regarding the new law for sanctions against Russia is no "diplomatic show. It's an economic cautionary tale of geopolitics getting in the way of the physical flow and price of energy.

Foreign Secretary Vikram Misri has expressed New Delhi's concerns about the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026 to the American bipartisan Congressional delegation visiting India. The bill, signed by Trump on September 18, empowers the US President to impose new tariffs of up to 100 per cent on nations that comply with the set conditions based on their purchases of Russian oil and gas.

Nearly 90% of crude oil used in India is imported. About 30.3 per cent of India's crude imports by value were from Russia in FY2026, which was valued at $40.8 billion against a total crude import bill of $134.7 billion. After 2022, Russian barrels made a big difference due to sanctions changing the flow of trade and Russia's competitive crude prices.

Things are more complex in 2026. Tensions and unrest in West Asia have put a strain on supplies, freight and insurance rates, and diversifications have become much more expensive.

On Sept. 30, the December active contract trading at $98 was around the $100 per barrel mark on Brent crude. This is a very different market for Indian refiners compared with the relatively tranquil $60-$70 crude market that prevailed throughout much of 2025.

This is why an understanding of India's objection has to be seen not just as a Russia policy, but as an energy-security policy.

Russian supplies are already on the wane. Roughly 2.1 million bpd of Russian crude was imported into India in August but September imports are expected to be around 1.75 million bpd, the lowest in several months. Indian refiners are making up for this with UAE, Iraq and Saudi Arabia barrels as well as buying from Africa and Venezuela.

At the same time, if Washington's tariff policy drives away many of its main buyers from Russian crude, those buyers will be bidding for many of the same replacement barrels. Then, Saudi, Emirati, Iraqi, American and Brazilian crude is more valuable, as is African crude. Russia could lose the power of pricing, while the other producing nations will have this power.

The paradox behind secondary energy sanctions is that is exactly that.The paradox of secondary energy sanctions is that's precisely that. A measure to curb Moscow's petroleum revenue can, under the tight supply conditions, raise the international price of the barrels Russia continues to sell outside of Russia.

For India, each extra dollar on crude is important. The industry estimates are based on the assumption of a $1-a-barrel escalation which can increase the cost of the oil-import bill by about ₹18,000 crore per year depending on volumes and exchange rate. Oil is used in transportation, aviation, fertiliser production, petrochemicals and inflation, thereby stressing all these facets and as well the rupee.

The currency is already under a lot of pressure. The rupee slipped around 0.7 per cent in September and 1.2 per cent in the July-September quarter as high commodity costs and rising global yields and geopolitical risks weighed on Indian assets.

There's another aspect of Washington's business he can't neglect; India isn't just a buyer of crude. It is one of the world's prime refining centres.

India has a combined refining capacity of ~258 MT/yr in 22 refineries. In FY25-26, India imported approximately 61.5 million tonnes of petroleum products and consumed approximately 243 million tonnes of domestic petroleum products.

If Russia's crude comes into India, it is not necessarily an Indian economic story. It may appear in the form of diesel, aviation turbine fuel, petrol or other products feeding other markets. Access to crude oil for Indian refiners could then be a delaying factor, causing repercussions beyond India, as crude oil supplies are interrupted during periods of global tightness in diesel and products markets.

The estimated value of U.S. goods and services trade with India in 2025 is $239.6 billion. The value of goods trade was approximately $149.1 billion. Both countries have been working towards strengthening the cooperation in technology, defence, critical minerals, manufacturing, supply chains and energy for years.

Such a tariff move, close to, if not at the statutory maximum, would thus be an unprecedented clash of strategic partnership and sanctions policy.

Importantly, there is no automatic 100 per cent tariff on Indian export products today. The bill gives Washington authority and discretion, including waivers. That distinction matters. The actual battle will be on the implementation side.

That Russia's strongest position is neither defiant for the sake of defiant nor dependent on Russian crude is therefore New Delhi's best case scenario. It is optionality.

India should further diversify its crude mix, boost strategic reserves, improve long-term supply deals with the Gulf, boost domestic crude exploration, and maintain its access to Russian crude supply as long as it is commercially and legally viable.

Washington also has to determine its objective for sanctions. The first aim is to punish Russia. Another is averting an energy-price shock. Third, maintaining strategic ties with India.

In India's case, the message is very clear; energy security for 1.4 billion people cannot be treated as a by-product of another country's sanctions framework.