India’s average crude import cost has increased sharply versus the Dubai benchmark, in FY2026 so far, even as the share of Russian crude in the country’s oil basket has declined, said Kotak Institutional Equities in its latest report.
The brokerage noted that with alternate crudes likely to be more expensive, premiums could also remain elevated and impact GRMs for refiners.
According to Kotak, India’s average oil import cost is nearly $5/bbl higher versus Dubai crude in FY2026 so far, the steepest premium recorded in recent years.
The report attributed the rise, to reduced discounts on Russian crudes, rising premiums from other countries, lower Venezuelan imports and higher US imports.
Russia’s share in India’s crude imports has slipped to “34 per cent in FY2026 so far (36 per cent in FY2024 and FY2025),” Kotak said, citing Commerce Ministry data.
While Russia continues to be India’s top crude supplier, the shift signals a gradual rebalancing of sources amid Western pressure.
The report added that “Russia’s share in India’s crude import was negligible until FY2022, but it’s the largest source of crude for the past three years.
“India’s refiners began significantly increasing purchases from Moscow after sanctions on Russian oil following the Ukraine conflict in early 2022, taking advantage of deep discounts.In value terms, the cheaper barrels have helped India save billions. “Since Apr 2022, Russian imports have led to potential savings of $16.7 bn (versus ex-Russia imports),” Kotak estimated.
The average “discount for Russian crude” stands at “$4.7/bbl so far this year versus $2.5/bbl in FY2025, but lower than FY2023/24 levels.”
Despite the lower discounts compared to earlier years, Russian barrels remain cost-effective for Indian refiners.
“Despite western sanctions and gradual widening measures, Russia’s oil exports have not yet been significantly impacted. Reduced imports by EU countries have been offset by higher imports by India, China, Turkey and a few others,” Kotak noted.
However, the report warned that geopolitical pressure on India could increase. “Although the Indian government has not confirmed this, we believe the pressure to reduce Russian crude imports will likely rise,” Kotak said.
The brokerage cited US President Donald Trump claims that India has agreed to cut its dependence on Russian oil, a move that New Delhi has not officially acknowledged.While Kotak expects some moderation in Russian purchases, it does not foresee a complete halt.
“While stopping Russian imports fully is not feasible, as it could lead to price spikes, India will likely reduce the quantum,” the report said.
The shift could come at a cost. With higher prices for alternative crude grades, “India’s average oil import costs (versus the Dubai benchmark) are sharply higher this year.”
This may squeeze refining margins, especially for state-run oil companies that rely on discounted supplies.
Overall, the brokerage said India will continue to balance geopolitical pressures with economic priorities.
“It has been our consistent priority to safeguard the interest of Indian consumers in a volatile energy scenario. Our import policies are entirely guided by this objective,” the Ministry of External Affairs was quoted as saying.