According to the Times of India, India has made nearly Rs 35,000 crore by importing Russian crude oil at a discount since the outbreak of the Russia-Ukraine conflict in February.

According to the report, India began buying Russian crude on dips as the conflict prompted traditional buyers in Moscow to shun crude, while shipment-constrained traders began offering deep discounts. Despite pressure from developed countries, India has opted to import crude oil.

After Moscow decided to attack Ukraine, Russia refused to deliver the goods despite pressure from developed countries.

The country has become the second-largest buyer of Russian crude after China. Russian oil accounts for 12% of the country’s total oil purchases, up from less than 1% before the war. In July, Russia became India’s second-largest oil supplier, with Saudi Arabia third. Although Riyadh regained its status in August, Russia remained India’s third-largest oil supplier, Reuters reported, citing trade data.

Mineral oil imports from Russia in the April-July period rose more than eightfold year-on-year to $11.2 billion, compared with $1.3 billion in the same period last year, Commerce Ministry data showed. Since India increased imports from Russia in March, the value of imports has exceeded $12 billion, compared with just over $1.5 billion last year. About $7 billion in imports occurred in June and July.

Oil prices are crucial for India as it meets 83% of its needs through imports, leaving the economy vulnerable. The country’s oil import bill doubled to $119 billion in 2021-22, straining government finances and weighing on the post-pandemic economic recovery.

Earlier this month, Finance Minister Nirmala Sitharaman told a seminar that oil imports from Russia were part of an inflation management strategy and other countries were doing similar things.

In other words, refiners are buying oil, not governments. But cheaper oil positively affects the macroeconomic parameters of the economy. They cut costs and reined in current account deficits by lowering import bills and reducing demand for dollars. The government’s subsidy bill has also come down, leaving the money for social welfare and infrastructure.

This is the second time a global oil market decline has saved India money. TOI first reported on May 5 of that year that in 2020, when the global pandemic caused oil prices to plummet, the government increased its strategic reserves, with refiners storing oil on ships to save Rs 25,000 crore later when prices rose.

Russian oil continues to flow into India to remain attractive enough to interested buyers as traders address sanctions-related issues in shipping, insurance, and banking.