Russia has stopped selling India crude oil at a discount and is instead charging full market pricing. This is because tensions around the world are rising and supply chains are getting tighter. President Vladimir Putin’s decision to end long-standing preferential accords is a big change. It was made because of recent geopolitical tensions and rising demand.
Background on India-Russia Oil Trade
India became one of the biggest buyers of Russian crude following Western sanctions imposed after Russia invaded Ukraine in 2022, as it bought Urals blend selling at up to $20 discount to Brent to compensate costlier Middle East supplies. Some exports came from Russia, filling an important void: India imported about 5 mbpd in 2025, and Russia emerged as its largest supplier despite US warnings. Discounts had been widening steadily prior to the latest events, though they still provided a boon for Indian refiners such as Reliance and state companies.
Triggering Events: Geopolitics and US Pressure
In August 2025, the Trump administration doubled tariffs on India to 50% in response to New Delhi’s refusal to heed calls to stop buying Russian oil, which forced Indian refiners (as early as May) to reduce orders while replacing them with alternatives from the Middle East. That left Russia with surplus oil floating at sea. The “Operation Epic Fury” strikes on Iran—US and Israeli forces—on Feb. 28, 2026 started the escalation that would close the Strait of Hormuz on March 2, cutting 20 mbpd of Gulf output. By March 8 oil prices soared from $65 to $92 per barrel making Russian Urals to command a premium of $4-5 over Brent for India.
Putin’s Response: “Business, Not Friendship”
Putin told PM Narendra Modi directly, “No more Mr Nice Guy. It’s just business now,” chiding India for abruptly reducing purchases at the behest of the United States. “You refuse to buy our oil without telling us,” he added. “And now all of a sudden you want it?” Commercial sales only going forward, and no more “no limits” friendship benefits since a December deal. The Kremlin sees this as payback, taking advantage of its sanction-proof exports that straddle the damaged Gulf sea lanes.
US Waiver and India’s Dilemma
Confronted with supply shortfalls, the US granted a 30-day waiver to India last week to purchase even more of that stranded Russian oil in an effort to reduce prices worldwide. To offset stolen barrels from Gulf countries, India plans to ramp up imports of Russian oil even at the end of discounts. With 41 suppliers the refiners IOC and BPCL are still buying balancing national interest with joint ventures
Market and Economic Impacts
Russia’s advantage grows with global chaos: Its 5 mbpd in exports can replace a quarter of missing Gulf supply. Full-price Russian oil costs more to refine and makes fuel more expensive for India, stressing its 258-million-ton-per-year capacity (to hit 309.5 million in 2030). Europe gets gas through the high-priced line, and Russia goes to where they can make a profit — China. Analysts anticipate robust Russian deliveries to India through 2026, with a focus on margins rather than political fashions.