Russian oil disruption threatens global economy, India's burden manageable at $5bn a year: Report

The disruption in Russian oil exports is capable of causing major problems in the global economy, but would leave India with little damage, a report by the Bank of Baroda has said.

The report states that India’s oil import bill will be affected by a manageable rate surmounting $5 billion annually, a loss that will not be too harsh on the country’s economy. “For the world economy, there could be a greater problem if there is a full embargo on Russian oil exports,” it said.

India’s crude oil sourcing pattern has changed significantly in recent years, leading to more security in case of global supply chain disruptions. Before the Ukraine war in 2021-22, Russia’s share in India’s crude oil imports was modest. By 2024-25, however, Russia emerged as the largest supplier, followed by Iraq with a 19 per cent share, Saudi Arabia with 14 per cent, and the UAE with nearly 10 per cent.

Together, these four countries accounted for almost 80 per cent of India’s oil imports last year, pushing the US, once a major oil supplier, to lower levels.

Meanwhile, in terms of prices, there is considerable variation among suppliers due to factors such as logistics, quality, and purchase timing. In 2024-25, Iraq offered the lowest average price at USD 76.83 per barrel, followed closely by Russia at USD 78.39 per barrel, about USD 1.56 lower than India’s overall average price.

India imported approximately 244 million tonnes of crude oil in 2024–25, equivalent to around 1.8 billion barrels. For every $1 increase in oil prices, the country faces an additional $1.8 billion in import costs. However, with June’s average price only $2.50 higher than Russian crude, the report noted that the potential financial impact remains manageable.

The report said, “The overall impact hence would not be more than $4.5-5 bn on an annual basis. Given that overall imports of goods were $720 bn, this would not be a significant increase which cannot be absorbed”.

With inputs from ANI