Introduction
India has recently made headlines for its oil imports from Russia. Russian Oil Imports Helped India’s Economy save around $12.6 billion in just 39 months. This savings comes from how India buys oil from Russia compared to other countries. The relationship between India and Russian oil is essential for understanding how it affects the economy, especially with rising global prices.
Impact of Russian Oil on India’s Economy
According to The Indian Express, Indian refiners saved $12.6 billion between April 2022 and June 2025. They compared the prices of Russian oil with oil from other suppliers. While this savings is significant, it is less than what many expected. The discounts on Russian oil have been decreasing over time and hit their lowest point alongside rising prices for the 2024-25 fiscal year.
Effect of Global Prices
It’s important to think about what might have happened if India had not begun buying Russian oil. Global crude prices could have been much higher. If that had happened, India’s oil import bill would have grown a lot more. India relies heavily on oil imports, with about 88% of its oil needs met through imports. If prices were to rise significantly, the cost would impact the country’s economy greatly.
This could explain why India continues to purchase oil from Russia despite pressure from the United States. India is maintaining its strategic autonomy and does not want to be told who it should trade with, especially from a long-term partner like Russia.
U.S. Tariffs and Political Pressure
In August 2022, U.S. President Donald Trump imposed a 25% tariff on Indian goods as a penalty for buying Russian oil. This penalty could affect India’s goods exports to the U.S., valued at about $87 billion in 2024-25. While Trump has taken action against India for its oil imports, he has not done the same with China, which is a larger buyer of Russian oil.
The Indian government called the tariffs “unjustified and unreasonable.” They pointed out that their imports came about because traditional supplies were sent to Europe, and the U.S. encouraged India to stabilize global energy markets.
Support from the Biden Administration
The Biden administration also encouraged India to boost its Russian oil imports. This was in response to Russia’s invasion of Ukraine in February 2022. If no one buys Russian oil, global prices would spike, leading to higher costs for countries like India.
As long as the oil is not under sanctions, India will buy it from the best suppliers. Russian oil is not currently sanctioned, just subject to a price cap imposed by the U.S. and its allies.
The Shift in Oil Supply
Before the invasion of Ukraine, Russia only supplied less than 2% of India’s oil. However, following the invasion, many Western countries rejected Russian oil. Russia then offered discounts to willing buyers, including India, which quickly took advantage of this. Within months, Russia became India’s top source of crude oil, supplying more than a third of its total imports.
Savings from Imports
In the financial year 2022-23, India’s total oil import bill was $162.21 billion, with Russian oil standing at about $31 billion. The average price for Russian oil was about $83.24 per barrel, which was $13 lower than oil from other countries. This created an effective discount of 13.6%.
The following year, in 2023-24, India imported 609 million barrels of Russian oil, a significant increase from the previous year’s 373 million barrels. The savings then rose to $5.41 billion, despite a smaller effective discount of 10.4%. The average landed price for Russian crude fell to $76.39 per barrel.
Adjustments for 2024-25
In the 2024-25 fiscal year, the picture changed again. Discounts on Russian oil shrank to just 2.8%. This led to savings of only $1.45 billion. The price of Russian crude was $78.50 per barrel, just $2.30 less than other oil sources.
Future Implications
Many experts believe that the actual savings for India might be higher than the recorded data shows. India’s choice to buy Russian oil has likely kept global oil prices more stable. If India had not purchased Russian shipments, prices could have surged even more.
For instance, if oil prices had gone up by just $10 per barrel, India’s oil import bill over 39 months could have increased by nearly $58 billion. This includes additional costs in each fiscal year from 2022-26.
Market Dynamics of Russian Oil
Experts suggest that if India halts its importation of Russian oil, global oil prices may rise sharply. A recent report from brokerage CLSA stated that prices could jump from $65 per barrel to $90-$100 per barrel if India stops buying. This could cause inflation to rise in many countries.
Nomura economists estimate that every $1 increase in oil prices could cost India an extra $1.8 billion annually. The potential loss of discounted Russian oil could push India’s oil bill up by about $11 billion per year.
Conclusion
India’s connection with Russian oil is more than just a trade agreement. Russian Oil Imports Helped India’s Economy by reflecting strategic decisions in the face of global challenges. The need for oil is critical, especially given India’s high dependency on imports. As world oil prices continue to be volatile, how India navigates these waters will be key to its economic stability.
