Heavy Discount Benefits Diminish as Geopolitical Costs Outweigh Russian Crude Savings

The economic attractiveness of heavily discounted Russian crude diminished for Indian buyers in 2025 as geopolitical costs began to outweigh pricing advantages. While US crude imports to India surged by 65.6% to $8.2 billion during April-December 2025, Russian crude imports contracted by more than 17%, falling from $40 billion to $33.1 billion in the same period.
December 2025 data illustrates this changing cost-benefit analysis. Russian crude shipments to India declined by 15.15% to $2.71 billion from $3.2 billion in December 2024, making Russia the only supplier among India’s top five to record negative growth. This occurred despite Russia’s continued offering of crude at significant discounts compared to other suppliers.
India’s other major crude suppliers, though typically charging higher prices, expanded their market share. Saudi Arabia achieved exceptional growth of 61%, supplying crude valued at $1.75 billion in December 2025. The United States posted a 31% increase with shipments totaling $569.30 million. Iraq recorded a 4.56% rise to $2.37 billion, while UAE deliveries grew 6% to $1.65 billion.
The shift in economics appears driven by the US imposition of a 25% punitive tariff on Indian goods on August 27, 2025, specifically designed to discourage purchases of sanctioned Russian petroleum. This tariff effectively negated the pricing benefits of discounted Russian crude, prompting refiners to recalculate their procurement strategies. Russian crude imports fell from $3.62 billion in July 2025 to $2.71 billion in December 2025.
India’s aggregate crude oil imports from all sources reached $11.29 billion in December 2025, representing a 9.1% increase over December 2024. Cumulative imports for April-December 2025 totaled $105.10 billion, slightly below the $109.33 billion recorded in the same period of 2024. Government officials maintain that energy security for the nation’s vast population drives all procurement decisions.