Not $25 bn, India’s actual gain from Russia oil purchase at just $2.5 bn: Report busts Trump claims

India’s benefit from importing discounted Russian oil stands at only $2.5 billion per year, far below earlier estimates of $10–25 billion, according to a PTI report, citing new research document released on Thursday, effectively debunking recent claims, including those by US President Donald Trump.

Halting imports from Russia would leave India — the world’s third-largest oil importer and consumer — with limited alternatives, potentially pushing global crude prices back up to $100 per barrel due to already tight supplies and rising demand.

“Benefit from Russian oil imports is way less than exaggerated media numbers,” PTI quoted brokerage CLSA as saying in a report.

While “some media outlets have estimated the benefit in the range of $10 billion to $25 billion for India from Russian crude imports, we calculate the net annual benefit to India from Russian crude imports to be much smaller at just $2.5 billion or a small 0.6 bpc of India’s GDP,” it said.

India’s imports of Russian oil increased from under 1% to nearly 40% of its total crude intake following the Ukraine war, driven by steep discounts offered by Moscow amid Western sanctions.

While this shift helped India secure cheaper energy, the Trump administration accused New Delhi of profiteering by refining Russian oil and exporting it, including to Europe.

India has pushed back against the criticism, stating it has not violated any international laws. There are currently no sanctions on buying Russian crude, and the EU’s ban on fuel made from Russian oil is a recent development. The US also has not imposed restrictions on such purchases.

At present, India imports 36 per cent of its oil needs from Russia. Of the 5.4 million barrels per day (mbpd) of imports, 36 per cent (1.8 mbpd) of crude oil came from its top supplier, Russia, in 2024-25. Other key suppliers of crude oil to India are Saudi Arabia (14 per cent), Iraq (20 per cent), the UAE (9 per cent) and the USA (4 per cent).

While many EU countries have banned imports of Russian oil, a price cap was introduced for other countries purchasing Russian crude oil. Indian imports have adhered to this price cap.

Russia exports about 4.3-4.8 mbpd (total output of 9.2 mbpd), which is about 5 per cent of the overall crude oil supply. Besides India, China is the other big importer of Russian crude oil, with an estimated 2 mbpd of oil imported from the country over the past year.

CLSA has said the actual benefit from discounted Russian crude is far lower than widely reported, noting that the apparent headline discount compared to Dubai crude seems inflated due to the $60 price cap, especially when Brent crude trades above $75 per barrel.

“However, the net gain to Indian importers is far smaller than this visible discount, as there are several shipping, insurance and reinsurance-related restrictions for Russian crude. Therefore, Indian refiners import Russian crude on a cost, insurance and freight (CIF) basis, landed in India. Thus, the landed price of Russian crude is at a far lower discount,” it said.

Indian oil marketing companies (OMCs) have highlighted that the discount of Russian crude averaged around $8.5 per barrel in FY24, but this discount fell to USD 3-5 in FY25 and has declined to about $1.5 per barrel in the recent months.

“Using an average discount of USD 4 per barrel would imply a total annual advantage of just USD 2.5 billion captured by Indian importers in FY25, ie, equal to 0.6 bps of India’s GDP. However, current discounts would take down the annualised gains from this import to just USD 1 billion,” the report said.

While it’s simplistic to assess Russian crude imports in isolation, refining requires a balanced mix of crude types. A higher share of lower-quality Russian crude forces refineries to also purchase more high-quality — and costlier — crude to maintain operational efficiency, reported PTI.

Therefore, to gauge the true benefit of Russian oil imports, one must examine whether there’s a reduction in the average price of crude imported by India, added the report.

“To our surprise, the import data of the government reveals no clear gains from Russian oil imports, as the unit price of Indian crude oil imports has moved from a discount versus Dubai pre-FY22 to a premium over the past couple of years. So, any such large gain is not discernible from the Indian oil import data,” CLSA said.

It went on to state that the price of crude oil, which is converted into fuels such as petrol and diesel, could rise to $90-100 per barrel if India stops importing Russian oil.

“With only a few buyers purchasing Russian crude, any stoppage from India may make it difficult for Russia to find buyers for possibly 1 million bpd or 1 per cent of global supply in the near term. Although India should be able to easily secure supply from other sellers, such a supply disruption could drive a spike in crude oil price to $90-100 per barrel and would drive up inflation across the world, in our view.”

CLSA argued that Indian imports of Russian oil provide a much-needed check on crude oil prices, as well as curbing the risk of global inflation.

“Economics aside, we believe the issue of Russian crude oil imports has now become a political one with India reiterating its freedom to choose its trade partners within the purview of global trade rules.”

With inputs from agencies

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