Understanding India's oil trade with Russia | Number Theory

These claims and counter claims aside, there is merit in looking at substantive numbers vis-à-vis Russia-India oil trade

India’s oil trade with Russia is in the news once again, thanks to US President Donald Trump’s statement that India has assured him that it will stop its oil purchases from Russia soon. India’s external affairs ministry in turn said the country has been broad-basing and diversifying its energy sourcing, including expanding procurement from the US but that its primary priority was safeguarding the interests of Indian consumers. These claims and counter claims aside, there is merit in looking at substantive numbers vis-à-vis Russia-India oil trade.

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  Russia’s share in India’s crude oil imports spiked after Ukraine war

  Russia was an insignificant source of crude oil imports for India until the war between Russia and Ukraine started in February 2022. The trend started reversing almost immediately after the war and Russia’s share reached almost one-third in terms of value within just over a year. Monthly trade data from the Centre for Monitoring Indian Economy (CMIE) database shows that Russia’s share in crude oil imports in value terms was 30% in August 2025, the latest period for which this data is available. While there have been monthly fluctuations in the data, Russia has continued to be an important, if not the most important source of India’s energy imports in the aftermath of the Ukraine war. See Chart 1: Russia’s share in India’s crude oil imports
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  Russian oil’s cost premium has come down in the more recent period

  Why exactly did India pivot to Russia for its crude oil imports? For more than a year after the Ukraine war erupted, it was significantly cheaper for India to buy Russian crude oil. The CMIE database has unit value of crude oil imports for major countries where India imports from. A comparison of unit value of Russian crude oil imports vis-à-vis, UAE, Iraq and Saudi Arabia – the top three sources of India’s crude oil import in 2024-25 apart from Russia – shows that Russia’s cost premium has come down from what it was in the first year of the war. For August 2025, the latest period for which this data is available, unit value of Russian crude oil was less than 10% lower than imports from Saudi Arabia and UAE and slightly expensive compared to crude oil imports from Iraq. See Chart 2: unit value of crude oil imports from Russia, UAE, Saudi Arabia and Iraq
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  The reason for diminishing cost premium of Russian oil is a fall in global crude prices

  Global crude oil prices increased sharply in the aftermath of the Ukraine war. The quantum of increase was almost $30 per barrel between January and March 2022 the months before and after the start of the war. While prices did come down from their immediate peak, they sort of stabilized in the ballpark of above $80 per barrel until last year after which they have fallen sharply. Crude oil price in the last six months ending September has been between $60-70, levels last seen in 2021 when the global economy was still reeling from the pandemic’s impact. The moderation in global oil prices has clearly had an impact on the cost premium India was getting from its Russian oil imports. To be sure, India has always insisted that its pivot to Russian oil imports was more about taking care of a supply side disruption – many European buyers shifted from buying Russian to buying West Asian – than just making windfall gains from a cost premium on Russian oil. If at all India was to stop buying Russian oil – the cost advantage is not much in any case – it remains to be seen whether the other supplies, which could potentially include the US itself, can fulfill India’s energy requirements without a major disruption in international energy markets. See Chart 3: international crude oil prices
• And the Indo-Russia oil trade has to be seen in the wider context

  A lot of well-meaning commentators have been arguing that India should stop buying Russian oil which can help it get rid of the additional 25% tariffs Trump has imposed on India in an unfair manner; China is a bigger buyer of Russian energy than India and there is no such tariff on it. However, what needs to be underlined is the fact that what started as just a pragmatic pivot in energy markets for India is now more than that. Trump has also been trying to get India to admit that he played a key role in negotiating a cease-fire during Operation Sindoor and is eying a greater share of India’s military hardware imports where Russia continues to be an important, and significantly more cost effective source than the US. As is always the case, whether or not to buy Russian oil is only a small piece in India’s overall geopolitical puzzle.