India’s Russian oil strategy is entering a more difficult phase. The central question is no longer whether discounted crude can reduce refinery costs, but whether those savings remain large enough to offset the wider trade, shipping and financial risks associated with buying it.
That matters because India is the world’s third-largest crude oil importer and meets around 88% of its crude requirement through imports, according to the analysis published by The Times of India. Every change in the price or reliability of imported oil affects the country’s foreign-exchange bill, refinery margins, transport costs and, eventually, businesses and consumers.
India’s decision to increase Russian crude purchases after 2022 was driven by commercial logic. Western buyers retreated from Russian supplies after the war in Ukraine, and discounts made the cargoes attractive to Indian refiners. Russian crude accounted for less than 2% of India’s crude imports before the war but expanded rapidly as refiners looked for affordable alternatives.
The arrangement worked partly because Indian refining infrastructure is relatively flexible. Several sophisticated refineries can process a broad range of crude grades, including heavier and higher-sulphur varieties that require more intensive treatment. This gives refiners the ability to switch suppliers and blends when relative prices change, although the capability differs from one refinery to another.
The economics of a crude shipment, however, extend well beyond its headline discount. Refiners must account for freight, insurance, voyage time, payment terms, working capital, supply reliability and the value of the petrol, diesel and aviation fuel produced from each barrel. Processing requirements also affect the final margin because different crude grades consume different amounts of energy and hydrogen.
This is why a cheaper barrel at the point of purchase does not automatically produce the best commercial outcome. The analysis compares Russian Urals with Venezuela’s Merey 16, noting that the latter may sometimes be cheaper but contains a larger proportion of heavy molecules and residual material, as well as high sulphur. Those characteristics can increase processing costs and reduce the apparent advantage of the initial discount.
The savings from Russian crude have nevertheless been substantial. Industry estimates cited in the report place India’s savings at around $12 billion between April 2022 and June 2025. The estimate compares the average landed cost of Russian crude with supplies from other sources. The reported savings were approximately $4.9 billion in fiscal 2023, $5.4 billion in fiscal 2024, $1.5 billion in fiscal 2025 and $840 million between April and June 2025.
These figures are estimates rather than a simple cash transfer to consumers or the government. The distribution of the benefit depended on refinery margins, fuel prices and taxation. The calculation also requires assumptions about crude quality, comparable grades and the costs of alternative supplies. Even with those limitations, the reported figures indicate that Russian crude created a multibillion-dollar economic benefit during the period when its price advantage was strongest.
That advantage has narrowed sharply. Industry estimates cited by the authors show the Russian landed-price advantage declining from around $13 per barrel in fiscal 2023 to $2.30 per barrel in fiscal 2025. Delivered Urals discounts to Brent were observed at around $1-2 per barrel in late July 2026, compared with more than $10 earlier that month.
The change is important for procurement decisions. A discount that once provided a broad buffer against freight, processing and financial risks may no longer be sufficient to absorb them. The commercial value of Russian crude must therefore be recalculated for every shipment rather than assumed from historical performance.
The scale of current purchases makes that reassessment consequential. The report says around 2.1 million barrels per day of Russian crude were delivered to India in August 2026, representing close to 45% of the country’s total import mix, down from more than 50% in the previous month. At that level, even a small change in the net advantage can produce a large annual difference.
The report uses an illustrative calculation to show the sensitivity. At purchases of one million barrels a day, every $1 per barrel of net advantage is worth approximately $365 million a year. A $2 advantage would be worth about $730 million, while a $5 advantage would amount to roughly $1.83 billion. These figures do not establish the actual value of India’s current purchases, but they show why small changes in discounts matter at national scale.
The new risk comes from the possibility of US action affecting countries that continue to buy Russian oil and gas. The report says the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026, signed into law on September 18, provides for tariffs of up to 100% on goods from the five largest buyers of Russian oil and natural gas.
The direct exposure for India would not necessarily be a 100% surcharge on crude arriving at Indian ports. The more immediate risk identified in the analysis is potential damage to Indian exports entering the United States. Additional pressure on shipping and financial networks supporting Russian trade could also increase transaction costs or disrupt payments and deliveries before any formal tariff impact is fully realised.
This creates a policy problem that cannot be solved by comparing the Russian crude price with the price of another barrel alone. India must compare the refinery-level saving with the possible economy-wide cost of weaker exports, higher financial friction and supply interruptions.
The report cites India’s US goods exports at $86.5 billion in fiscal 2026. A hypothetical 10% decline would represent around $8.7 billion in lost export sales, assuming other conditions remained unchanged. The figure is not a forecast, and tariffs are formally paid by US importers. Their economic burden can nevertheless be transmitted through prices, margins and demand, affecting Indian exporters and supply chains.
This distinction is essential. The debate is not simply about whether Russia offers a discount or whether the United States imposes a tariff. It is about whether a narrow saving in the energy import bill could expose a much larger export relationship to disruption. The relevant calculation must include both the value of the oil discount and the potential cost imposed elsewhere in the economy.
An abrupt withdrawal from Russian crude would also carry costs. Replacement cargoes may have higher delivered prices, while refinery schedules, inventories and product yields would need to be adjusted. If displaced Russian barrels fail to find other buyers, a reduction in global supply could lift benchmark prices across India’s entire import basket. If the barrels are redirected easily, the global price effect would be smaller.
This makes diversification a question of procurement flexibility rather than a simple choice between dependence and withdrawal. Indian refiners can assess supplies from the Middle East, the Americas and Africa while retaining the ability to adjust Russian purchases when the commercial advantage remains strong. Contracts with flexible volumes would be more useful in a market where freight costs, sanctions exposure and payment conditions can change quickly.
The institutional challenge extends beyond refiners. Energy companies determine whether a barrel is technically and financially usable, but trade and finance authorities must assess the consequences for exports, currency flows, shipping access and diplomatic relations. A decision that appears efficient at refinery level may not be efficient for the wider economy if it creates larger risks for manufacturing and merchandise trade.
The evidence in the report confirms that Russian crude has generated meaningful savings for India, but it also shows that the historical advantage has weakened. What remains uncertain is the final cost of any US tariff implementation, the product coverage, the availability of waivers and the extent to which shipping and financial networks are affected.
India’s next oil procurement decisions will therefore be judged against a broader test: whether the next Russian barrel improves the country’s overall economic position after accounting for its delivered cost, refinery suitability, supply reliability and potential trade exposure. The answer will depend less on the discount advertised at the loading port than on the complete risk-adjusted cost of bringing that barrel into India’s energy system.