Shift from Russian oil may cost India up to $5 bn annually

While many, including Nobel laureate Abhijit Banerjee, have said India would do well to rethink cheap oil purchases from Russia, as the hefty US tariffs could hit it harder, sector experts say though Indian refiners could technically adapt to the loss of Russian barrels, it would have significant economic consequences.

- ARUNIMA BHARADWAJ

WHILE MANY, INCLUDING Nobel laureate Abhijit Banerjee, have said India would do well to rethink cheap oil purchases from Russia, as the hefty US tariffs could hit it harder, sector experts say though Indian refiners could technically adapt to the loss of Russian barrels, it would have significant economic consequences.

Diverting oil supply chains from Russia could entail an additional $3-5 billion in annual import costs, according to Kpler.

Experts believe that even though Russian crude discounts have narrowed compared to 2022-2023, in absence of it, India would need to turn to West Asian grades, which are currently trading at a premium—at least $3-5/bbl higher.

More importantly, if global prices rise further (a scenario in which Russian crude exports are being curtailed, in the absence of sufficient buying interest from India), the financial burden on India could increase significantly.