Will India’s Sweet Spot For Russian Crude Last?

The changing market has interestingly exposed the limits of treating Russian crude as an automatic bargain. 

India faces this complicated scenario, with Brent crude falling to around US$ 91 a barrel, Russian supplies becoming commercially less attractive at times, and a possible meeting involving US President Donald Trump, Russian President Vladimir Putin, and Chinese President Xi Jinping at the Asia-Pacific summit in Shenzhen on 18-19 November. 

Russian oil helped Indian refiners secure substantial discounts after Western buyers curtailed purchases following Moscow's invasion of Ukraine. It diversified India's supply base, strengthened its bargaining position with traditional Gulf suppliers, and helped contain the cost of imported energy.

But the economics have become more fluid.

A Question Of Landed Cost

India's crude imports reached a record 5.54 million bpd in October, up 9% from September and the same month a year earlier, as refiners took advantage of improving availability and built inventories ahead of stronger seasonal demand. Russian shipments recovered to nearly 2.1 million bpd in October, after falling to 1.64 million bpd in September, but remained below the peaks recorded earlier in the year.

The share of Russian crude in India's imports, which surged amid rising prices in the international market, has consequently become less a question of political alignment than of relative landed cost. Freight, insurance, supplier premiums, and the risk of sanctions-related complications can erode the discount available at the loading port. 

Bharat Petroleum Corporation's Finance Director Vetsa Ramakrishna Gupta has said Russian purchases could decline in November because Persian Gulf grades had become more commercially attractive as supplies from the region improved. Russian premiums, which were around US$ 12-13 a barrel in October, have since narrowed to approximately US$ 1-2 for December cargoes, potentially improving their competitiveness again.

India’s Crude Strategy

That volatility is central to India's strategy. A Russian barrel priced attractively at origin may not remain cheap once shipping and insurance are included. Conversely, a narrowing supplier premium could make it worthwhile again if freight costs ease and payment channels remain workable. Indian refiners therefore need the freedom to switch between Russian, Gulf, US, and other grades rather than commit themselves to a fixed geopolitical preference.

China adds another complication. Its access to Russian crude through pipelines can reduce exposure to the freight and insurance costs faced by seaborne buyers. As Yasuhiro Enomoto of the Marubeni Institute has observed, China may be increasing purchases of Russian crude delivered by pipeline because it is less exposed to rising shipping costs, leaving the oil relatively inexpensive on an imported basis. Indian refiners competing for seaborne cargoes do not enjoy the same advantage.

Global Crude Prices

Brent futures were trading at US$ 91.29 a barrel on Thursday, while US West Texas Intermediate (WTI) stood at US$ 85.29, after both benchmarks declined by more than 1%. Brent has retreated sharply from the US$ 118 level touched on 30 October, as markets price in the possibility of reduced military escalation in the Middle East, progress in Russia-Ukraine discussions and a recovery in production from major oil exporters. Rising US crude inventories have added to the downward pressure.

The country’s crude oil import bill climbed 46.3% to US$ 90.6 billion in April-September 2026, compared with US$ 61.9 billion in the corresponding period a year earlier, while import volumes remained broadly stable at around 122-123 million tonnes. The September bill alone reached US$ 15.4 billion, up about 47% year on year.

The average price of the Indian crude basket rose to US$ 121.85 a barrel in October, from US$ 116.09 in September and US$ 65.08 in October 2025. The October average is particularly important: the fall in Brent during November cannot immediately reverse the higher costs already incurred by refiners, nor does it automatically translate into lower landed prices for incoming cargoes.

India imports more than 85% of its crude requirements and brings in roughly 1.8-2 billion barrels annually. At that scale, every sustained US$ 1-per-barrel movement changes the annual import bill by approximately US$ 1.8-2 billion, before accounting for currency movements, freight, insurance and changes in consumption. 

A sustained US$ 10 decline could therefore save US$ 18-20 billion, easing pressure on the current account, the rupee and domestic inflation. But the benefit depends on how long lower prices persist and how quickly they feed into the Indian import basket.

The latest decline is being driven by a combination of geopolitical expectations and improving supply. Washington has signalled that further military action against Iran is not necessary at present, while diplomatic contacts have raised hopes of preventing another escalation. Russian and Ukrainian negotiators have also agreed to a major prisoner exchange after talks in Abu Dhabi, although territorial and other substantive differences remain unresolved.

Supply conditions are adding to the correction. OPEC+ production rose by about 2.04 million barrels per day in October to 41.23 million bpd, equivalent to 97% of its pre-war February output, according to the group's latest report. Saudi Arabia accounted for much of the increase, lifting production to 10.563 million bpd. Russia's output also rose by 41,000 bpd to 8.668 million bpd. Separately, US crude inventories increased by 9 million barrels in the latest week, according to preliminary industry data.

The Shenzhen Variable

The prospective Trump-Putin-Xi meeting in Shenzhen could introduce another layer of uncertainty into the oil market. Its importance for India lies less in the diplomatic spectacle than in whether an understanding among the three powers changes the conditions under which Russian energy is traded, the trajectory of the Iran conflict or the balance of influence over global supply chains.

A reduction in tensions between Washington and Tehran could lower the risk premium on Middle Eastern crude and improve the reliability of Gulf shipments. A meaningful accommodation between Washington and Moscow could alter sanctions enforcement and the commercial terms under which Russian oil reaches Asian buyers. 

But neither outcome can be assumed. The meeting could produce limited diplomatic progress without resolving the conflicts and restrictions that have reshaped energy trade.

For India, the sanctions question remains particularly sensitive. The US legislation associated with Senator Lindsey Graham provides for tariffs of up to 100% on goods from major buyers of Russian energy. The Trump administration's 16 October waiver has reduced the immediate threat of additional penalties, but it is revocable and does not remove existing sanctions exposure. Refiners and banks must therefore factor policy uncertainty into contracts, payments, and shipping arrangements.

Venezuelan crude offers another possible source of diversification, but it is not an uncomplicated substitute. India imported about US$ 3.6 billion of Venezuelan crude between April and August, with Reliance Industries accounting for roughly 74% of those purchases. 

The country's complex refineries can process heavy grades such as Venezuelan Merey, which may be offered at a discount to Brent. Yet a discount of around US$ 25 a barrel can be offset by freight costs estimated at about US$ 35 a barrel on the voyage to India. Commercial viability, not diplomatic encouragement, will determine whether those flows expand.

India's strongest position is therefore neither to defend Russian oil at any cost nor to replace it under pressure from Washington. The Russian discount has served a clear economic purpose, but its value depends on the price delivered to Indian refineries and the risks attached to securing it. The same test must apply to Gulf, American, and Venezuelan supplies.

The Shenzhen discussions may influence the political environment in which those choices are made, but they cannot remove India's structural dependence on imported energy. New Delhi's priority must be to preserve supplier diversity, strengthen strategic reserves, secure reliable shipping and payment channels, and ensure that refiners can respond quickly to changes in relative prices.

For an economy importing more than 85% of its crude, energy security is not measured by loyalty to a supplier or alignment with a power bloc. It is measured by the ability to obtain the right grade at the lowest sustainable landed cost, without allowing another country's sanctions, conflict or diplomatic bargain to dictate India's economic choices.

(The writer has been an economic analyst and journalist for more than three decades)