MC EXCLUSIVE India has room to manage crude imports even if Russian oil supplies shrink

Losing this pricing cushion would not only inflate input costs but also strain fiscal balances if the government intervenes to prevent retail fuel inflation

A senior government official said India has multiple options to manage its crude oil imports amid concerns that India's oil import bill will increase after the US claimed that New Delhi agreed to stop buying discounted Russian oil.

“We will see. It's a sector which manages the purchase basket. We have different options,” a senior finance ministry official told Moneycontrol.

The US President, while announcing the US-India trade deal, including the removal of the 25 per cent punitive tariffs on India, claimed that India has agreed to stop purchasing crude oil from Russia. Additionally, India is to step up the purchase of US crude oil and potentially start buying oil from Venezuela.

“It was an Honour to speak with Prime Minister Modi of India this morning. He is one of my greatest friends, a Powerful and Respected Leader of his Country. We spoke about many things, including Trade, and ending the War with Russia and Ukraine. He agreed to stop buying Russian oil, and to buy much more from the United States and, potentially, Venezuela,” Trump said in a post on Truth Social on Monday.

According to Kpler, India’s annual crude import bill could rise by $3-4 billion, assuming a conservative $5 per barrel differential on 1.8 million barrels per day of displaced volumes if Russian crude becomes inaccessible.

Losing this pricing cushion would not only inflate input costs but also strain fiscal balances if the government intervenes to prevent retail fuel inflation.

The country’s oil import bill stood at $90.7 billion during April-December of FY26 compared to $102.5 billion in the same period a year ago, as per data from Petroleum Planning and Analysis Cell.

Russia had emerged as the top supplier of crude oil to India after its invasion of Ukraine on the back of the heavy discounts it offered on its Urals. The country’s share in the Indian crude basket has increased to as much as 35 percent-40 percent in recent years from just 0.2 per cent before the Russia-Ukraine war.

In January 2026, India’s purchases of Russian oil stood at 1.2 million barrels per day, as per data from Kpler.

The country has ample physical supply options including Middle Eastern grades that would replace the bulk quickly, supplemented by US and West African barrels, as per analysts. However, they note that the real cost would be losing discounted crude resulting in higher average prices and a stronger focus on term contracts, diversification, and refinery optimization.