IMF Report
Oil imports from Russia at discount helped India save $7 bln/year
This story was originally published at 23:16 IST on 27 February 2025
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NEW DELHI – India's import of crude oil at a discounted price from Russia helped New Delhi save around $7 billion per year, the International Monetary Fund said in a report on Thursday. India has been importing large volume of crude oil from Russia at a discounted price after Western nations imposed economic sanctions on Moscow for invading Ukraine in 2022.
"Russian oil has been offered at a substantial discount to price benchmarks in international markets—reportedly reaching at times up to $40/bbl, though significantly lower over the past year—due to international sanctions regimes against Russia," the IMF said in its Country Report titled India: 2024 Article IV Consultation. "Conservatively estimating the CIF (Cost Insurance Freight) price savings at about $10/bbl in FY24 yields savings estimates of around US$7 billion per year (about 0.2 percent of GDP)."
Russia has been the top source of crude oil import for India since 2022-23 (Apr-Mar), with a twelvefold jump in inbound shipment of Russian crude oil that year, and 50% rise in FY24. Russia's share in India's total oil imports surged to 33.4% in FY24 from a mere 2% in FY22.
However, reliance on Russian crude oil has also exposed India to risks related to changes in interantional sanctions against Russia. "In mid-January 2025 oil deliveries from Russia have been temporarily disrupted by the announcement of new international sanctions, which targeted the Russian oil producers as well as vessels and insurance companies involved in transporting Russian oil," the report said. "The sanctions have prompted Indian refineries to reassess their oil import strategies, explore alternative supply sources, and take proactive measures to mitigate potential disruptions."
India's trade dynamic with Russia is likely to reset in the coming future as New Delhi has committed to an increase its energy imports from the US. After the US President Donald Trump expressed displeasure over Washington's trade deficit with India, and threatened to impose high tariffs, Prime Minister Narendra Modi, in a meeting with Trump, agreed to make US the leading supplier of oil and natural gas.
The US is India's top export destination, with its share in India's total merchandise exports at about 17%. India exported goods worth $77.52 billion to the US in FY24 and had a trade surplus of $35.32 billion. The US had a share of only 3.6% in India's total oil imports in FY24. End
US$1 = INR 87.20
Reported by Krity Ambey
Edited by Deepshikha Bhardwaj
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