India's surging imports of Russian crude oil are being fuelled by supply disruptions in West Asia rather than price discounts, according to an Axis Bank Economic Research report released on Tuesday, 22 September 2026. Imports have averaged 60 million barrels per month since the start of the US-Iran war, up sharply from 46 million barrels a month during FY23–26.

The Supply Shock Argument

The Axis Bank report argues that the additional 1 million barrels per day flowing in from Russia since March 2026 'can't be explained by price dynamics alone.' The average discount on Russian crude versus West Asia grades has remained stable at $3–5 per barrel since 2023 — and notably, Russia's share of Indian crude imports actually rose even during periods when Russian barrels carried premiums of up to $7 per barrel.

Since the outbreak of the US-Iran war, India has cumulatively imported 298 million barrels of Russian crude, according to the report. The scale of this shift underscores how significantly the geopolitical disruption in West Asia has reshuffled India's energy sourcing calculus.

How Russia's Share in India's Crude Basket Evolved

Russia's share in India's imported crude basket climbed from 0 per cent in March 2022 to 30 per cent by June 2023 — a spike the report attributes largely to the steep discounts available in that early phase following Western sanctions on Moscow. However, the more recent acceleration in volumes tells a different story, one of structural necessity driven by West Asian supply constraints rather than opportunistic discount-hunting.

The report also notes that if India were to procure the excess 60–80 million barrels on the spot market instead, global oil prices would likely be higher than current levels — implying that Russia-to-India flows are, paradoxically, acting as a stabilising force in global energy markets.

Tariff Dynamics and the US Trade Backdrop

The report situates India's energy strategy within a broader US trade and geopolitical context. It notes that the threat of very high tariffs has historically proven more useful as leverage in trade negotiations than tariffs themselves, and that higher oil prices carry a more direct passthrough into US retail inflation.

Republicans are reportedly under pressure in the midterms owing to elevated energy prices — a factor that could constrain Washington's room to escalate trade or sanctions measures. The report flags that Congressional backing makes tariff threats 'legally durable', while pending outcomes of Section 301 investigations on excess capacity could raise tariff volatility going forward.

For India, the report identifies a useful anchor in the 18 per cent headline tariff rate agreed before the US Supreme Court invalidated tariffs under IEEPA authority in February 2026, noting that effective rates tend to run lower than headline rates due to exemptions.

India's Export Momentum

On the trade side, India's exports this fiscal year have grown 19 per cent year-on-year, led by electronics, automobiles and auto parts, metals, and refined petroleum products. Exports to the US have also recovered, offering a degree of cushion against global uncertainty.

With West Asian supply risks showing no sign of abating and Russia's crude continuing to fill the gap, India's energy import strategy is likely to remain a focal point for both domestic policymakers and international observers in the months ahead.