India Ramps Up Russian Oil Purchases Amid Widening Discounts, US Concerns Persist

Rapid summary

• US Pressure on India: Washington has increased pressure on New Delhi over it’s growing imports of heavily discounted russian crude oil, stating these purchases fund Russia’s war in Ukraine.
• Tariffs Imposed: The US imposed a 50% tariff on Indian purchases of Russian oil and a 25% duty on other Indian goods.
• Discounts Offered by Russia: Russian urals crude is being offered at discounts of $3-$4 per barrel compared to Brent for late September and October shipments, considerably cheaper than US crude priced at a $3 premium to Brent.
• India’s Oil Trade Surge: India has ramped up its imports of Russian oil from less than 1% pre-war to nearly 40%,making Russia its largest supplier in 2024-25,surpassing Iraq,Saudi Arabia,UAE,and the US.
• Economic Benefits Debated: While media reports suggested India’s savings from discounted Russian oil range from $10 billion-$25 billion annually, brokerage CLSA estimates savings at just $2.5 billion (0.6% of GDP).
• India’s Position: New Delhi asserts that its trade with Moscow does not violate international sanctions against Russia and plans to continue importing Russian crude despite pressure. Refinery executives indicate no change in this stance.

!India became the largest customer of Russian oil from 2022

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Indian Opinion Analysis

India’s decision to prioritize discounted Russian crude amidst rising tensions with Washington reflects the complexities inherent in balancing economic realities with diplomatic pressures. As one of the world’s largest energy importers, India’s drive for affordability makes deepened reliance on cost-effective suppliers like Russia logical-even as geopolitical stress intensifies globally.

From an economic standpoint, brokers like CLSA estimate that actual fiscal gains are modest relative to early projections yet remain significant enough for India’s refiners given global market volatility. While Washington views these transactions as enabling Moscow amid conflict escalation in Ukraine-a viewpoint echoed through tariffs-the absence of universal legal restrictions further supports India’s stance that such purchases comply with international frameworks.

Long-term implications may center around bilateral dynamics between India and the US-not only regarding energy but broader trade relations-highlighting future challenges if tensions or retaliatory measures escalate further within unrelated negotiations happening sectorally like defense nx exports