Russia Keeps India Hooked: Oil Discounts Remain Attractive Despite Market Shifts

Russia, one of the world’s largest energy exporters, continues to hold a strong position in India’s oil import basket, thanks to significant discounts that keep Indian refiners interested despite global price fluctuations and sanctions pressure. According to energy market watchers, Russia’s oil price remains discounted enough compared to Middle Eastern and African crude, ensuring that India—currently the top buyer of Russian seaborne oil—remains a steady customer.

India’s Growing Appetite for Russian Crude

Before the Ukraine conflict, Russia’s share in India’s crude oil imports was relatively small. However, the introduction of steep price cuts following Western sanctions turned Russia into India’s largest supplier of crude by volume in 2023–24, overtaking traditional giants like Iraq and Saudi Arabia.

The discounts offered—sometimes ranging from $6 to $10 per barrel below benchmark prices—have allowed Indian refiners to process Russian oil profitably, even after accounting for longer shipping distances and higher insurance premiums.

Discounts Still Attractive Despite Narrowing Margins

While analysts note that the gap between Russian and Middle Eastern crude has narrowed in recent months, the discount remains sizable enough to keep India in the game. Global crude prices, influenced by OPEC+ production cuts and demand recovery, have pushed higher, but Russia is reportedly continuing to sell at competitive levels to safeguard its market share in Asia.

For India, where energy security is critical and domestic demand for fuels like diesel and petrol continues to grow, such cost savings remain valuable. Every dollar saved per barrel translates into significant financial relief for refiners and, indirectly, for the economy.

Geopolitics and Payment Mechanisms

One of the biggest challenges in India-Russia oil trade has been payment settlement, as Western sanctions limit transactions in dollars. Over the past two years, refiners have experimented with multiple mechanisms, including rupee payments, third-country currencies, and barter-style arrangements.

Despite these hurdles, the commercial incentive remains strong enough for both sides to find workarounds. For Russia, India offers a reliable and fast-growing market. For India, the stability of discounted supplies outweighs the logistical complexities.

India’s Balanced Approach

Even as India strengthens its energy partnership with Russia, it continues to maintain a balanced oil import strategy, sourcing crude from the Middle East, Africa, and the United States. Officials stress that India’s buying decisions are driven purely by commercial considerations, ensuring that refiners choose the most cost-effective supplies.

By keeping its sourcing flexible, India reduces risks associated with overdependence on a single region while still reaping the benefits of Russian discounts.

The Road Ahead

Energy experts believe Russia will continue to offer attractive deals to lock in Asian customers, especially as Europe remains largely closed to its crude exports. The sustainability of these discounts, however, depends on global oil demand trends, shipping costs, and the evolving sanctions regime.

For India, the strategy remains clear: maximize economic advantage without compromising energy security. As long as Russian oil trades at a meaningful discount, it will remain a core part of India’s import portfolio.

Russia’s oil discounts have proved to be a game-changer in India’s energy equation, making Moscow a dominant supplier in a short span of time. Even as margins shrink slightly, the pricing remains favorable enough for Indian refiners to keep Russian oil flowing into the country. In the current global energy landscape, where affordability and security of supply are paramount, Russia’s discounts ensure that its place in India’s oil basket is secure for the foreseeable future.