Oil on the Boil: Russian Cushion Shields India Amid West Asia Tensions

Amid escalating tensions in West Asia following Israel’s attacks on Iran, international crude oil prices have surged, raising fresh concerns for oil-importing nations like India. The region’s growing instability threatens to disrupt global oil supplies, potentially inflating crude prices further. However, India appears to have positioned itself with a degree of strategic insulation.

Despite importing over 85% of its crude oil needs, India has managed to diversify its import sources in recent years, mitigating the risks associated with geopolitical flare-ups in any single region. One of the most notable shifts has been the increased import of discounted crude oil from Russia, especially after Western sanctions forced Moscow to seek new buyers.

Import Share Shifts: Russia In, West Asia Down

The transformation in India’s import basket is evident. While West Asia once dominated India’s crude imports, its share has gradually declined. In contrast, Russian oil — offered at competitive prices amid geopolitical isolation — has found a growing foothold in the Indian market. By 2024, Russia accounted for a significant portion of India’s oil imports, outpacing several traditional suppliers.

Crude Oil Prices: India’s Basket Near Global Average

Despite global volatility, the price of India’s crude oil basket has consistently remained close to the global average. From FY19 to FY24, Indian crude prices largely mirrored international benchmarks, reflecting effective procurement and pricing strategies. In FY24, for instance, India’s crude basket was priced at $78.73 per barrel, comparable to the global average of $78.56.

Declining Share in Total Imports

Interestingly, the share of crude oil in India’s total import bill has declined over the past seven years — from 25% in April 2018 to just over 16% in April 2025. This trend suggests not only reduced dependency on expensive imports but also a possible diversification of the overall import portfolio.

Conclusion

While rising global crude prices due to West Asian conflict pose risks, India’s evolving oil procurement strategy — especially its pivot to Russian crude — offers a crucial cushion. With diversified sources and steady pricing, India is better equipped today to weather oil market shocks than it was a few years ago.

Sources: Business Standard, Thurro, World Bank, PPAC