Moscow’s oil helped India save $12.6 billion in 39 months; presumptive savings likely much higher as Russian oil imports kept global prices in check | Business News

This may be among the reasons why India has shown no signs of buckling under American pressure on the issue of oil imports from Russia. Also, while there is a domestic trade-off at play—the apparently prohibitive cost of sky-high US tariffs on India’s small and medium exporters versus the relatively lower savings accrued by large refiners by buying discounted Russian crude—Trump’s public posturing has made it difficult for India to cut back on Russian oil immediately even if it wanted to. It is clear that New Delhi does not want to compromise on its strategic autonomy and is unwilling to be dictated to by Washington on whom it should be doing business with, particularly when it comes to Russia—an old and key strategic partner for India.

Indian refiners’ hefty imports of Russian crude are seen as a lever that the Trump administration believes it can use to force the Kremlin’s hand into ending the Ukraine war. Oil exports are the biggest source of revenue for Moscow, and New Delhi is the second-largest buyer of its oil after Beijing. Early August, Trump announced an additional 25 per cent tariff—over and above the 25 per cent tariff announced on Indian goods—as a penalty for India’s Russian oil imports. The hit is expected to be significant for a bulk of India’s goods exports to the US, which were valued at around $87 billion in 2024-25. Notably, while Trump has slapped additional tariffs on India, it has not taken any such action so far against China, the biggest buyer of Russian oil.

New Delhi has termed the Trump administration’s action “unjustified and unreasonable” and said these imports began as its traditional supplies were diverted to Europe, with the US having “actively encouraged such imports by India for strengthening global energy markets stability”. The Joe Biden administration had encouraged India to increase Russian oil imports following Russia’s February 2022 invasion of Ukraine as the West began shunning Moscow’s oil. The reason was simple: Russia is a major oil exporter and if a bulk of its oil goes off the market for dearth of buyers, international oil prices could shoot up, something that the US itself did not desire.

The Indian government continues to maintain that the country will buy oil from wherever it gets the best deal, as long as the oil is not under sanctions. There are no sanctions on Russian oil; it is only subject to a price cap imposed by the US and its allies that applies if Western shipping and insurance services are used for transporting the oil. India’s public sector refiners have stated that they have not received any signal or directive from the government on the issue, and they will continue to buy Russian oil as long as it remains economically and commercially viable.

Russian oil math: discounts and savings

When Russia invaded Ukraine in February 2022, Moscow’s share in New Delhi’s oil imports was less than 2 per cent. With much of the West snubbing Russian crude following the invasion, Russia began offering discounts on its oil to willing buyers. Indian refiners were quick to avail the opportunity, leading to Russia—earlier a peripheral supplier of oil to India—emerging as India’s biggest source of crude within a matter of months, displacing the traditional West Asian suppliers. Currently, Russia accounts for more than a third of India’s oil imports by volume.

*Discount calculated on average per-barrel price of oil imports from all countries except Russia

Source: Analysis based on India’s official trade data available with the Ministry of Commerce and Industry

In 2022-23, India’s total oil import bill was $162.21 billion. Had Indian refiners paid for Russian oil the average price they paid for crude from all other suppliers put together, the oil import bill would have been $167.08 billion, or $4.87 billion higher, shows The Indian Express’s analysis of India’s trade data. The value of oil imports from Russia for the period was around $31 billion, and the average landed price of Russian crude for Indian refiners was $83.24 per barrel, about $13 lower than the average landed price of non-Russian barrels, translating into an effective discount of 13.6 per cent to the average price of oil imported from other supplying nations.

While the price of crude oil depends on grades and their prices can vary substantially, the average landed price of crude and import volumes from the supplying countries were used for computations as the government does not release grade-wise data.

In 2023-24, although the effective discount on landed price of Russian oil to non-Russian barrels averaged lower at 10.4 per cent, the savings were higher at $5.41 billion as the volume of oil imports from Russia rose significantly to around 609 million barrels from 373 million barrels in 2022-23, the analysis shows. In 2023-24, the average landed price of Russian crude imported by India was $76.39 per barrel, $8.89 lower than the average landed price of non-Russian oil.

The 2024-25 fiscal, however, saw a significant erosion in discounts as well as savings. The discount for the year averaged at just 2.8 per cent, leading to savings of just $1.45 billion, with the landed price of Russian crude—$78.5 per barrel—just $2.3 lower than the average landed price of a non-Russian barrel of oil imported into India. In the June quarter of 2025-26—the period till which country-wise and commodity-specific trade data is available—the discount expanded to 6.2 per cent, with a Russian barrel averaging at $69.74 versus $74.37 from other suppliers, leading to savings worth $0.84 billion.

According to industry watchers and experts, the reasons for erosion in discounts mainly include the general direction of decline that oil prices have taken, which have led to a significant contraction in the delta between the $60-per-barrel price cap on Russian crude and international oil prices, and the notably higher cost of freight and insurance for Russian crude as compared to oil from other suppliers due to the Western curbs on Moscow’s oil trade. This means that while the discounts might have been deeper on the actual price of oil, the discount on landed price—which includes freight and insurance costs—would work out to be much lower. And for India, the price that really matters is the landed price as that is the cost that refiners actually pay.

Presumptive savings may be much higher

Beyond the actual savings that the trade data analysis establishes, oil industry executives and experts believe that the presumptive savings may be notably higher, given that India’s rapidly expanded appetite for Russian crude contributed in keeping global oil prices in check. This, in turn, helped India—which has an oil import dependency level of around 88 per cent—avoid paying much more for its oil imports.

For the sake of understanding, consider this: had the average landed price of oil imported into India between April 2022 and June 2025 been higher by $10 per barrel, the country’s oil import bill for the 39-month period would have been higher by nearly $58 billion—an additional $17.35 billion in 2022-23, $16.97 billion in 2023-24, $17.89 billion in 2024-25, and $5.34 billion in April-June of 2025-26. Had the price been higher by $20 per barrel, the additional burden would have been around $116 billion.

Even today, industry experts and analysts believe that global oil prices would jump if India stops buying Russian crude, as much of that supply is unlikely to find buyers elsewhere given the current circumstances. In a recent report, brokerage CLSA estimated that oil prices could jump from the current levels of around $65 per barrel to $90-$100 if India stops importing Russian oil.

“With only a few buyers purchasing Russian crude, any stoppage from India may make it difficult for Russia to find buyers for possibly 1 million bpd or 1 per cent of global supply in the near term. Although India should be able to easily secure supply from other sellers, such a supply disruption could drive a spike in crude oil price to $90–100 per barrel and would drive up inflation across the world, in our view,” CLSA said.

“Economics aside, we believe the issue of Russian crude oil imports has now become a political one with India reiterating its freedom to choose its trade partners within the purview of global trade rules,” it added.

Nomura economists estimate that given India imported around 1.8 billion barrels of oil in 2024-25, India’s annual import bill could rise by around $1.8 billion for every $1 increase in global crude prices. According to an analysis by global real-time data and analytics provider Kpler, the combined effect of loss of discounted barrels and the potential increase in international oil prices due to a chunk of Russian supply going off the market could push up India’s annual oil import bill by up to $11 billion. India’s economy is vulnerable to global oil price volatility. It also has a bearing on the country’s trade deficit, foreign exchange reserves, the rupee’s exchange rate, and inflation rate, among others.