How much will India have to spend if it stops importing oil from Russia?

US President Donald Trump wants India to stop buying Russian oil.

Trump has imposed a tariff of 50 per cent on India for its relationship with Russia. He has accused India of financing Russia’s war with Ukraine.

India has said it will do whatever is best in its national interest. India has also hit back at America and Europe for its own continued trade dealings with Russia.

But how much will India have to spend if it stops importing Russian crude oil?

Let’s take a closer look:

India’s oil imports

First, let’s examine India’s crude oil imports from Russia.

India is a massive oil consumer. It needs over 5 million barrels of oil per day to meet domestic requirements – of which it imports 85 per cent.

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India today imports a third of its crude oil from Russia. India has purchased 88 metric million tonnes of oil from Russia this year alone.

In July, India got over 2 million barrels per day from Russia. Moscow comprised a whopping 41 per cent of its oil imports. From January to June, India bought around 1.75 million barrels per day from Russia. In 2024, that figure was even higher – 1.9 million barrels per day.

This wasn’t always the case.  In 2020, Russia supplied just 1.7 per cent of India’s crude oil imports. In 2021, India was importing just .1 million barrels of oil from Russia.

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If not Russia, from where can India buy its oil?

India back then was relying on its traditional suppliers in  West Asian – Iraq, Saudi Arabia and UAE. So, what changed? The outbreak of the Ukraine war. After Moscow’s invasion of Kyiv, US-led West imposed heavy sanctions on Russia.

While the US and Europe did not ban Russia from selling its oil, it capped the price under which Moscow could do so – thus limiting its coffers. Russia’s solution? Look for alternative buyers to the US and Europe. It did so by luring India and China through heavy discounts. Interestingly, America at the time supported India doing so to keep the prices of crude oil stable.

Hefty discounts

In 2022, the Russia under its price cap was selling crude to India at $60 (Rs 5,255) per barrel. Keep in mind that crude in general had soared to $137 (Rs 12,000) per barrel in the aftermath of the Ukraine invasion. Russia has continued to sell oil at a discount to India over the next few years.

Though the discount per barrel has become far less impressive of late, between $2 and $5 per barrel, India is still saving billions of dollars on its oil bill.

Petras Katinas, a Lithuania-based energy analyst at the Centre for Research on Energy and Clean Air (CREA), told DW India had potentially saved $33 billion from 2022 to 2024. Katinas said New Delhi had prioritised “energy security and affordability” while trying to keep ties with US and Russia on an even keel.

Barclays estimates India saved between $7 billion and 10 billion in its import bill in 2024.

How much could India spend?

The State Bank of India in a report said New Delhi could spend an extra $9 billion this year alone on buying crude if it looked for supplies elsewhere. By 2027 India could be spending as much as an extra $12 billion on crude oil.

“If Russian supplies were cut off, India could shift back to its traditional Middle Eastern suppliers under existing annual deals, ensuring flexibility in meeting its import needs,” the SBI noted in its report.

Others paint a far more rosy picture.

Analysts at Nomura pointed out that given Russia’s declining discounts on crude oil, India’s bill could only increase by $1.5 billion if it gives up Russian oil.

India can also buy crude from Guyana, Brazil, and Canada.

But that won’t happen quickly. Sumit Ritolia, a New Delhi-based oil analyst from trade research house Kpler, told DW that India could take up to a year to replace Russian oil. Ritolia said India could “reduce” its Russian oil imports, but added: “I don’t see us going down to zero anytime soon.”

Experts agree that India’s fuel bill could increase by billions were it to completely stop buying Russian oil.

What do experts say?

Experts say that New Delhi being cut off from Russian oil is not a good thing and that everyone will suffer. In fact, India buying crude oil from Russia after the Ukraine war kept the price under control.

“If India had not bought Russian crude [in 2022], it’s anyone’s guess what the oil price would have been — $100, $120, $300,” Ritolia told DW.

Keep in mind that Russia is the world’s second-biggest producer of crude oil. It fulfils around 10 per cent of the global demand, around 9.5 million barrels per day. It is also the world’s second-largest exporter of oil. It ships roughly 4.5 million barrels per day of crude and 2.3 million barrels per day of refined products.

They say that the price of oil, which is $65 (Rs 5,780) per barrel today, could skyrocket to as much as $200 (Rs 17,560) were India to stop buying Russian crude.

Things could get even worse if everyone boycotts Russian oil.

“There is nowhere to get those five million [barrels] fast enough to prevent a spike in oil prices.” Alexander Kolyandr, senior fellow at the Center for European Policy Analysis, told The Independent.

Even OPEC increasing its own output wouldn’t help in the short-term.

SBI predicts crude oil prices could increase as much as 10 per cent. “Russia accounts 10 per cent of global crude supply, if all the countries stopped buying from Russia. So crude price may increase by 10 per cent if no other countries increase their production,” it said in the report.

This in turn could spike inflation across the world.

In short, it’s a lose-lose for everyone.