A research report published by brokerage firm CLSA has pegged India’s gain from buying Russian crude oil at $2.5 billion a year, significantly lower than the claims made by top US government officials.

India is facing a punitive 50 per cent tariff on 66 per cent of its merchandise export to the US, amounting to $57 billion, for continuing to buy “cheap” Russian crude as the Trump administration accused India of funding the Kremlin’s war on Ukraine.

Treasury Secretary Scott Bessent, on August 19, said India made $16 billion in
excess profit from Russian crude.

Indian oil marketing companies (OMCs) have highlighted that the discount of Russian crude averaged around $8.5/barrel in FY24, but it fell to $3-5/barrel in FY25 and further declined to about $1.5/barrel in the recent months, CLSA noted.

“Using an average discount of $4/barrel would imply a total annual advantage of just $2.5 billion captured by Indian importers in FY25, ie, equal to 0.6 bps of India’s GDP. However, current discounts would take down the annualised gains from this import to just $1 billion,” analyst Vikash Kumar Jain and Kartik Kohli wrote in the report published on Thursday.

Bessent had accused some of the “richest families” of benefiting from the Russian oil deals, but did not name them. Mukesh Ambani’s Reliance Industries, which is going to hold its annual general meeting on Friday, is one of the largest importers of Russian crude in India, apart from Nayara, owned by Russian entities.

The analysts explained that the net gain to Indian importers is far smaller
than the visible discount, as there are several shipping, insurance and reinsurance-related restrictions for Russian crude.

Therefore, Indian refiners import Russian crude on a cost, insurance and freight (CIF) basis, landed in India at a far lower discount.

Moreover, to refine inferior Ural crude, refineries are often required to balance it with better-quality, more expensive crude.

“Therefore, to know the real gains of Russian oil imports, one needs to check if there are gains in the average price of crude imported by India.

“To our surprise, the import data of the government reveals no clear gains from Russian oil imports, as the unit price of Indian crude oil imports has moved from a discount versus Dubai pre-FY22 to a premium over the past couple of years. So, any such large gain is not discernible from the Indian oil import data,” the report said.

The CLSA report argued that oil prices can shoot up to $90-100 a barrel if India stops buying Russian crude.

“Although India should be able to easily secure supply from other sellers, such a supply disruption could drive a spike in crude oil price to US$90-100/bbl and would drive up inflation across the world, in our view,” said CLSA, which is owned by the Chinese CITIC Group.