India’s Russian Oil Strategy Driven by Supply Security, Not Cheap Prices

India’s increased imports of Russian crude oil are being driven primarily by supply disruptions in West Asia rather than price discounts, according to an Axis Bank Economic Research report released on Tuesday.

The report said India’s Russian crude imports have averaged around 60 million barrels a month since the start of the US-Iran war, compared with an average of 46 million barrels per month during FY23-26.

Since the beginning of the conflict, India has imported around 298 million barrels of Russian crude, the report said.

Russia’s share in India’s imported crude basket had risen from virtually zero to around 30 per cent between March 2022 and June 2023, a shift that the report attributed partly to the discounts available on Russian crude following the geopolitical developments.

However, the report argued that the additional increase of around 1 million barrels per day since March 2026 cannot be explained by price dynamics alone.

It noted that the average discount on Russian crude compared with West Asian crude has remained relatively stable at $3-$5 per barrel since 2023. At the same time, Russia’s share of India’s crude imports continued to rise even when Russian crude was trading at premiums of as much as $7 per barrel.

The report said that if India had instead sourced the additional 60-80 million barrels from the spot market, international oil prices could have been higher than current levels.

The analysis also examined the implications of oil prices for US inflation and trade policy. It said recent experience suggested that the threat of significantly higher tariffs could serve as greater leverage in trade negotiations than the actual imposition of tariffs.

Higher oil prices, the report noted, have a more direct impact on US retail inflation.

The report also pointed to political pressure in the United States arising from elevated energy prices, saying Republicans were facing challenges ahead of the midterm elections amid higher fuel costs.

On US trade policy towards India, the report said congressional backing could make tariff threats legally more durable, while pending outcomes under Section 301 concerning excess capacity could contribute to tariff volatility.

For India, the report identified an 18 per cent headline tariff rate as a useful reference point, noting that this was the rate agreed before the US Supreme Court invalidated tariffs imposed under the International Emergency Economic Powers Act (IEEPA) authority in February 2026.

The effective tariff rate can also be lower than the headline rate because of exemptions, it added.

Meanwhile, India’s exports have continued to show growth. Exports during the current fiscal year so far have increased 19 per cent year-on-year, led by electronics, automobiles and auto components, metals and refined petroleum products.

Exports to the United States have also shown signs of recovery, according to the report.

The analysis comes amid continued changes in global energy flows and trade patterns, with India balancing energy security, international prices and evolving trade relationships.