 "Indian imports bill could rise by $14 billion after stopping Russian oil imports")
India’s imports bill could rise by up to $14 billion after stopping Russian crude oil imports.
In addition to slapping India with 25 per cent tariff, US President Donald Trump has threatened additional penalties over the trade with Russia, mainly the purchase of Russian oil — India has bought discounted Russian oil since Russia launched the war on Ukraine in 2022.
The true cost of India replacing Russian oil imports in the wake of Trump’s threats would be much higher than $14 billion for India and the world.
The true cost of replacing Russian oil for India — and the world
India stopping the purchase of Russian oil could raise the price of oil by up to $10 per barrel, raising the country’s import bill by around $13-14 billion, according to Prashant Vasisht, the Senior Vice President and Co-Group Head of Corporate Ratings at ICRA.
Vasisht suggested the true cost could be higher as prices of gas and other petroleum products and derivatives will also rise.
“Additionally, domestic gas and LNG imports linked to dated Brent prices would also become dearer thereby impacting all gas consumers such as fertiliser, city gas distribution etc. A $10/barrel increase in Brent prices could increase the cost of LNG purchased annually under the RasGas contract by Rs 3,900 crore,” Vasisht told The Financial Express.
ALSO READ: Trump's 25% tariff on India could drag down GDP growth by 50-60 basis points, say analysts
Between May 2022-2025, India saved around $17.2 billion with the purchase of discounted Russian oil, according to ICRA’s calculations.
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View AllHowever, that may now change — and not just for India.
With the purchase of discounted Russian oil, India and China have so far stabilised oil prices in the international market by absorbing Russian over-supply and easing the pressure on global prices. But, if and when India would stop importing Russian oil, the competition for non-Russian oil would rise and prices will rise as demand will rise in proportion to supply.
Western nations will also feel the pinch. Firstly, prices of oil will also rise for them owing to greater demand and limited supply of non-Russian oil. Secondly, since 2022, Indian refiners had been processing Russian crude and selling finished products to Western nations at cheaper rates. As such discounted purchases would end, their bills will rise as well.
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