Energy: Without Russian crude, India’s oil bill could go up by USD 12 bn
Virendra Pandit
New Delhi: Although India has diversified its crude suppliers across 40 countries, to cut down its energy dependence on the Middle East and Russia, reduced access to discounted Russian crude and potential global price hikes could still raise costs, the media reported on Friday.
India’s crude oil import bill could increase by USD 9 billion to USD 12 billion if it stops buying Russian crude oil, a State Bank of India (SBI) report said.
If India halts discounted oil imports from Russia for the rest of the current financial year (FY26), the fuel bill might increase by USD 9 billion in FY26 and USD 11.7 billion in FY27 because of increased prices.
Russia currently accounts for nearly 10 percent of the global crude supply. If all countries stopped buying from Russia, crude oil prices could rise by around 10 percent, unless other countries increased their production.
With the US and its allies slapping sanctions on Russia after its Ukraine invasion on February 24, 2022, India substantially increased purchase of heavily discounted Russian oil. Russia’s share in India’s total oil imports surged from just 1.7 percent in FY20 to 35.1 percent in FY25, making Russia India’s largest oil supplier. In volume terms, India imported 88 million metric tonnes (MMT) of crude from Russia in FY25, out of its total oil imports of 245 MMT.
Before the Ukraine war, Iraq was India’s top crude supplier, followed by Saudi Arabia and the United Arab Emirates (UAE). Indian refiners generally sourced crude from the Middle Eastern producers through annual contracts, which allowed flexibility to request additional supplies each month.
Since the imposition of sanctions on Russia, refiners also turned to crude suppliers in the United States, West Africa, and Azerbaijan.
India has further diversified its oil sources to about 40 countries, including Guyana, Brazil, and Canada, adding to the country’s energy security.
If Russian supplies were cut off, India could shift back to its traditional Middle Eastern suppliers under existing annual deals, ensuring flexibility in meeting its import needs.
The SBI report highlighted that while the potential increase in the import bill is significant, India’s diversified supply network and established contracts with other oil-producing nations may help cushion the impact.
However, a rise in global crude prices due to reduced Russian exports would still put upward pressure on costs.
