India Turns to Russian Oil Amid West Asia Supply Disruptions

India's increased imports of Russian crude oil are largely driven by supply disruptions in West Asia rather than discounts, according to a report. Since the start of the US-Iran war, India has imported an average of 60 million barrels per month from Russia, up from 46 million barrels a month during FY23-26.

The Axis Bank Economic Research report noted that despite prices stabilizing at $3-5 per barrel since 2023, and even with premiums as high as $7 per barrel, India's share of Russian crude imports rose significantly. This suggests that supply disruptions are the primary driver behind India's increased demand for Russian oil.

The report also highlighted the impact of tariff threats on US retail inflation, citing recent experience where the threat of high tariffs has proven more effective than actual tariffs in trade negotiations. In this context, the report argued that a stable tariff rate could provide a useful anchor for India's energy imports.