India’s oil diplomacy is again in the crosshairs as pressure mounts from Washington to cut ties with Russian crude. But a deep dive into the numbers shows that, for all the political noise, India could easily afford to ditch Russian oil, at least economically, though few expect a pivot as Delhi weighs the bigger geopolitical risks.
President Trump has threatened to slap India with penalties, on top of a 25% tariff already imposed, over its appetite for Russian barrels. Delhi has been defiant, signaling its intention to continue buying Russian crude despite U.S. pressure. The Ministry of External Affairs called the threats ‘unjustified and unreasonable,’ underscoring India’s resistance.”
A Logistically Easy Switch
India’s imports of Russian crude have risen tenfold since 2022, now representing around a third of its overall oil imports. As nearly all of India’s oil purchases from Russia arrive via ship, it would be “much more tricky to switch if it was delivered through pipeline,” Capital Economics said.
Indian refineries have flexibility given their ability to “switch grades relatively easily,” countering claims that refineries are locked exclusively into Russian crude supply.
Economic Impact of Switch Would Be Manageable
If India caved into pressure from Washington and ended up paying a premium for , which trades about $4 per barrel above Russian Urals, the macro hit is modest.
Even if India loses access to discounted Russian barrels and must pay Brent prices, the macro impact remains manageable. According to Capital Economics, the added cost would increase the current account deficit by about $3 billion to 4 billion, or 0.1% of GDP.
The hit to inflation from paying more for oil would add less than 0.1% to consumer inflation, an albeit negligible boost, particularly given that the headline rate has recently dropped to its lowest in six years, Capital Economics added.
Why Not Just Cut Russian Oil?
Despite manageable costs and logistical options, India resists abandoning Russian oil purchases. Indian policymakers have taken a “defiant” stance, Capital Economics said, pushing back against U.S. threats. The Ministry of External Affairs called the actions “unjustified and unreasonable,” suggesting the U.S. moves are more likely a negotiating tactic amid broader trade discussions.
Political considerations loom large. Domestically, “it would not play well for policymakers to be seen to be backing down to Trump’s demands,” especially since Trump has publicly fostered relations with Pakistan during heightened tensions in Kashmir.
Not Just Energy, But Strategy
Ultimately, India’s Russian oil saga isn’t about taking sides. Delhi’s foreign policy has long been shaped by its non-aligned tradition, which is unlikely to be swayed by Washington. Capital Economics highlights that there will be reluctance to upend what are generally cordial relations between Delhi and Moscow.
Unless U.S. penalties become back-breaking, something even Trump may hesitate to impose given his focus on lower oil prices, there is little incentive for India to change course and shift away from Russian oil, even though it could easily do so without major economic pain.
Geopolitics, long-standing relationships, and domestic politics all point toward a continuation of Russian oil imports for now, regardless of Trump pressure
Source: Investing.com