India’s demand for Russian oil driven by supply shocks, not discounts: Report

India’s Russian crude imports have risen sharply since the US-Iran war due to West Asia supply disruptions rather than discounts, averaging 60 million barrels monthly. Axis Bank said Russia’s share increased despite stable discounts and premiums, while higher oil prices could impact US inflation

New Delhi: 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.

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.

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While Russia’s share in India’s imported crude basket jumped from 0 per cent to 30 per cent between March 2022 to June 2023, likely due to discounts, the additional 1 million barrel per day since March 2026 “can’t be explained by price dynamics alone”. “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.

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.

Republicans are already on the back foot in the midterms due to elevated energy prices.

“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.

When applied, the effective rate also tends to be lower than the headline rate due to exemptions. 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.