Key Highlights:

  • India's Russian crude imports have averaged 60 million barrels per month since the US-Iran war began, up from 46 million barrels monthly during FY23-26.
  • India has imported 298 million barrels of Russian crude since the war's onset, according to Axis Bank Economic Research.
  • The report argues the additional 1 million barrels per day since March 2026 "can't be explained by price dynamics alone."
  • Russia's share of Indian crude imports rose despite premiums of up to $7/bbl over West Asia crude.
  • India's exports this fiscal have grown 19% year-on-year, led by electronics, auto/parts, metals and refined petroleum products.

Supply Disruptions, Not Discounts, Behind the Shift

India's increased Russian crude imports are being driven by West Asia supply disruptions rather than discounts, with imports averaging 60 million barrels per month since the start of the US-Iran war, compared to 46 million barrels a month during FY23-26, a report showed on Tuesday.

A Substantial Cumulative Volume

Since the start of the US-Iran war, India has imported 298 million barrels of Russian crude, according to the Axis Bank Economic Research report, a figure that underscores the scale at which Indian refiners have leaned on Russian supply during this period of regional instability.

Distinguishing Two Distinct Phases of Growth

While Russia's share in India's imported crude basket jumped from 0 per cent to 30 per cent between March 2022 and June 2023, likely due to discounts, the additional 1 million barrels per day since March 2026 "can't be explained by price dynamics alone," the report noted, drawing a clear distinction between the earlier, discount-driven phase of Russian crude adoption and this more recent surge.

Why Price Alone Doesn't Explain the Increase

"First, the average discount on Russian crude vs. West Asia has been stable at $3-5/bbl since 2023. Second, Russia's share of Indian crude imports rose despite premiums of up to $7/bbl. If India were to procure these excess 60-80 mn barrels in the spot market, oil prices would likely be higher than today," the report argued, presenting a fairly detailed case that the recent increase reflects supply necessity rather than opportunistic price-driven purchasing.

A Broader Point on Tariff Leverage

Recent experience shows that the threat of very high tariffs is more useful as leverage in trade negotiations than tariffs themselves, and higher oil prices have a more direct passthrough on US retail inflation, said the report, connecting India's oil sourcing decisions to a broader geopolitical and trade policy context involving the United States.

Political Pressure in the US

Republicans are already on the back foot in the midterms due to elevated energy prices, a political dynamic that the report suggests may shape how aggressively the US pursues tariff measures tied to countries continuing to import Russian oil, given the risk that such measures could further push up domestic US fuel prices.

The Legal and Regulatory Backdrop

"Congressional backing makes this tariff threat legally durable, while pending outcomes of Section 301 on excess capacity could raise tariff volatility. For India, a useful anchor is the 18 per cent headline rate agreed before the US Supreme court invalidated tariffs under the IEEPA authority in February 2026," the report mentioned, offering a specific reference point for gauging the scale of potential tariff exposure facing India.

Effective Rates Often Lower Than Headline Figures

When applied, the effective rate also tends to be lower than the headline rate due to exemptions, the report noted, suggesting that whatever tariff structure ultimately applies to India is likely to have a somewhat more moderate real-world impact than the stated headline percentage alone would suggest.

Strong Export Growth Despite Tariff Uncertainty

India's exports this fiscal (to date) have grown 19 per cent year-on-year, led by electronics, auto/parts, metals and refined petroleum products, while exports to the US have also recovered, indicating that despite the ongoing tariff uncertainty and geopolitical tensions tied to its Russian oil imports, India's broader export performance has remained robust across a diverse set of sectors and, notably, even within its trade relationship with the United States itself.