India Faces Surge in Oil Import Bill Amid Potential Halt in Russian Crude Purchases

India may experience a USD 9-12 billion increase in its crude oil import expenses if it stops sourcing from Russia, the State Bank of India (SBI) reports. The halt could inflate the oil bill by USD 9 billion in FY26 and USD 11.7 billion in FY27 due to price surges.

The SBI report highlights that Russia currently contributes about 10% of global crude supply. Should every nation cease buying from Russia, oil prices might climb by roughly 10% unless alternative countries boost production.

Following 2022, India ramped up Russian oil purchases, capitalizing on discounted rates capped at USD 60 per barrel for energy security after Western sanctions against Moscow. Consequently, Russia's share of Indian imports soared to 35.1% in FY25, positioning it as the top supplier.

Pre-Ukraine conflict, Iraq, Saudi Arabia, and the UAE dominated as India's primary crude sources. Indian refiners typically engage Middle Eastern producers via flexible annual contracts.

Since Russian sanctions, India has also diversified its imports, tapping suppliers from the US, West Africa, Azerbaijan, and new options from Guyana, Brazil, and Canada, enhancing energy security.

If Russian supplies cease, India's fallback could be its traditional Middle Eastern contacts, ensuring flexibility. However, the SBI report notes potential price hikes globally could pressure costs despite India's diversified networks.