India's Russian Oil Imports Surge Amid West Asian Supply Disruptions

India's demand for Russian oil has seen a significant surge, driven not by discounts, but by supply shocks in West Asia. According to an Axis Bank Economic Research report, India has been importing an average of 60 million barrels per month since the start of the US-Iran war, compared to 46 million barrels a month during FY23-26.

The report reveals that India has imported a total of 298 million barrels of Russian crude since the start of the US-Iran war. 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. However, the additional 1 million barrel per day since March 2026 'can't be explained by price dynamics alone', according to the report.

The report argues that the average discount on Russian crude vs. West Asia has been stable at $3-5/bbl since 2023, and 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 also highlights that the threat of very high tariffs is more useful as leverage in trade negotiations than tariffs themselves, and higher oil prices have a direct passthrough on US retail inflation. Republicans are already on the back foot in the midterms due to elevated energy prices.