The Geopolitical Energy Shift.....

Following the imposition of Western sanctions on Russia to curtail its oil revenues, Moscow began offering substantial discounts on its crude. India, as the world's third-largest oil importer, seized this economic opportunity to meet its vast energy needs at a competitive price, increasing Russian oil's share of its total imports from a negligible 2.5% pre-conflict to nearly 40% in 2024-25. This strategic shift not only secured affordable energy for India's domestic market but also had a profound, stabilizing effect on the international oil market.

Mechanism of Price Containment and Inflation Mitigation

India's purchases helped contain global oil prices and inflation through the following mechanisms:

Preventing a Supply Shock: By absorbing millions of barrels of Russian oil that might otherwise have been "stranded" and unsellable in the global market, India prevented a massive supply disruption. Petroleum Minister Hardeep Puri stated that without India's intervention, global oil prices could have skyrocketed to over $120-$130 per barrel.

Maintaining Market Liquidity: The rerouting of Russian crude to India and China maintained global market liquidity and eased the pressure on traditional Middle Eastern suppliers, introducing a competitive equilibrium.

Adherence to Price Caps: India's imports largely remained within the G7's $60-per-barrel price cap mechanism, a policy implicitly designed to keep Russian oil flowing while limiting Moscow's revenue, a goal supported by Western nations to avoid price spikes.

Indirect Benefit to US Consumers: While the direct benefit of cheaper Russian oil accrued to India, the global market is interconnected. By preventing a worldwide price surge, India's actions helped moderate the international price benchmarks like Brent and WTI crude. Lower global prices, in turn, helped check inflation in oil-importing economies, including the US, where high gasoline prices can significantly impact consumer price indices (CPI) and the broader economy.

Recent Data and Analysis (2024-2025)

Recent data from 2024 and 2025 supports this analysis:

Import Data: India's imports of Russian crude remained resilient, fluctuating but consistently high, reaching nearly 40% of its total imports in FY 2024-25.

Savings Estimates: India saved an estimated $12.6 billion over a 39-month period by purchasing oil at significant discounts. While some recent reports from mid-2025 indicated that the net annual benefit was a lower $2.5 billion due to shrinking discounts and higher freight costs, the stabilizing effect on global prices remained the primary argument for continuing the trade.

Inflation Link: An economic paper published by the Reserve Bank of India (RBI) in July 2025 noted that a 10% rise in global crude prices could increase inflation by around 20 basis points, highlighting the direct link between import costs and domestic inflation management.

Price Spike Warnings: Analysts from brokerage CLSA warned in August 2025 that if India were to stop importing Russian oil, global prices could surge to $90-$100 per barrel, driving up inflation worldwide.

India's decision to import vast quantities of discounted Russian oil after the 2022 invasion was a pragmatic economic choice that leveraged a unique market situation to ensure its own energy security and control domestic inflation. This strategy had the significant spillover effect of absorbing a key portion of global supply, which prevented an acute worldwide shortage and the runaway oil prices (potentially up to $130 per barrel) that analysts feared. Ultimately, by keeping global prices in check, India indirectly helped manage inflation and energy costs for consumers in many nations, including the United States, illustrating the intricate and interdependent nature of the global energy market. India's significant purchase of discounted Russian oil since the 2022 Ukraine conflict has played a crucial role in stabilizing global energy markets and mitigating inflationary pressures, which has indirectly benefited the US and other oil-importing nations by preventing a sharp global price spike.