US waiver gives India room to retain cheaper Russian oil

The decision comes amid global crude prices exceeding $110 a barrel and disruptions to supplies from West Asia, making continued access to Russian oil particularly important for India, which imports more than 88% of its crude requirements. India’s Russian oil imports are expected to remain at 1.8-1.9 million barrels per day (bpd) in October, broadly unchanged from September’s 1.82 million bpd, according to ship-tracking firm Kpler.

The volumes suggest Moscow will retain its position as India’s largest crude supplier, with the tariff waiver potentially creating room for refiners to increase purchases depending on prices and availability. The US tariff waiver now gives Indian refiners greater flexibility to make procurement decisions based on commercial considerations rather than the immediate threat of additional punitive duties.

It could also help reverse some of the recent shift towards more expensive sources of crude. Russian oil has been central to India’s import strategy since 2022, with discounted barrels helping refiners contain feedstock costs. Urals crude traded at an average discount of $23 per barrel to benchmark Brent in September, according to analysts. Although Urals discounts are believed to have narrowed sharply in recent weeks amid tighter supplies, the trend was already underway independently of the US tariff waiver.

The reduction in discounts, therefore, does not necessarily diminish the significance of the relief, which allows refiners to continue accessing Russian supplies without the additional tariff-related risk. Freight costs for transporting Urals crude from the Black Sea to India have surged to $27-30 million per tanker in October from around $19 million in September. While this increases the landed cost of Russian crude and eats into the discounts available to refiners, the overall economics of Russian supplies will continue to depend on their relative cost against competing grades.

Besides freight, intensifying competition from Chinese refiners has pushed up prices for Russian cargoes. Indian refiners have already curtailed some purchases for November delivery as certain Urals offers turned more expensive. However, such adjustments reflect commercial decisions on individual cargoes rather than a fundamental shift away from Russian oil. Anthropic’s extreme AI scenario explained “Given our dependence on Russian crude, it cannot be replaced easily, especially now when supplies from West Asia are severely affected,” a senior official at a state-run refiner told FE in September, speaking on condition of anonymity.

For Indian refiners, the waiver provides an opportunity to preserve Russian crude as a principal source of supply while retaining the flexibility to purchase from the US, Venezuela and West Asian producers wherever commercially viable. More importantly, Russia’s position in India’s crude import basket is no longer dependent solely on the steep discounts that characterised the initial surge in purchases after 2022.

Even with narrower discounts and elevated shipping costs, Russian crude can remain an attractive option compared with costlier alternatives, particularly American oil. The waiver therefore reinforces an established sourcing relationship rather than creating a new price advantage. Trump’s October 16 executive order suspends specified sanctions and tariffs under the Lindsey O Graham Sanctioning Russia and Iran Act, which authorised duties of up to 100% on goods from major Russian energy buyers.

Although the relief remains reversible, the immediate removal of the tariff threat gives Indian refiners greater room to optimise their crude sourcing at a time of elevated global oil prices and supply disruptions. The extent of savings on India’s import bill will depend on freight rates, discounts and crude availability, but continued access to Russian barrels should help contain procurement costs relative to a greater reliance on more expensive alternatives.