Washington Can’t Match Moscow’s Oil Bargain for India
For weeks, Washington has been trying to strong-arm New Delhi into abandoning cheap Russian crude and turning instead to American barrels. Sergio Gor, Trump’s nominee for U.S. Ambassador to India, openly declared that India should open its market to U.S. crude, petroleum, and LNG. Commerce Secretary Howard Lutnick went further, threatening India with higher tariffs unless it stopped buying from Moscow. Yet the core question remains: can the U.S. actually match what Russia is offering India? The short answer is no.
Russia’s discounted crude has been a game-changer for India. Since 2022, Moscow has been selling oil at $8–15 per barrel cheaper than global benchmarks. This discount has saved India billions, providing breathing space for its economy while keeping inflation under control. By contrast, American oil typically arrives costlier, even before factoring in freight charges. Washington may talk of “reciprocal” trade, but economics are hard to bend.
The economic stakes are clear. India currently buys around 1.8 million barrels per day of Russian crude, roughly 36% of its oil imports. Replacing this entirely with U.S. crude would mean an annual shift of about 657 million barrels. Given that U.S. cargoes into India usually arrive at a $6–12 per barrel disadvantage compared to Russian Urals, India would face an additional import bill of $4–8 billion on the low end, and as much as $8–17 billion annually once freight and grade adjustments are factored in. This shock alone could worsen India’s current account deficit by 0.2–0.5% of GDP.
The inflationary effect would also be significant. Every $10 per barrel rise in crude typically adds around 0.20 percentage points to India’s CPI inflation. A $6–12 per barrel gap translates into 0.2–0.4 percentage points of additional inflation—enough to squeeze households and complicate monetary policy. On GDP growth, the drag is smaller but still notable: estimates suggest a 0.06–0.24 percentage point hit to real growth annually. In a country where even small changes ripple across millions of livelihoods, these numbers matter.
Logistics add another layer. Russian crude reaches India quickly and cheaply through shorter routes from the Black Sea, Baltic ports, and now the Pacific. U.S. crude must travel halfway across the world, raising tanker costs and delivery times. Simply put, shipping alone tilts the balance against the U.S.
Compatibility is another obstacle. Indian refineries—IOC, Reliance, Nayara—are configured to process heavier Russian blends like Urals and ESPO. U.S. crudes such as WTI Midland are lighter, requiring blending and adjustments that add further costs. Russia fits into India’s refining basket seamlessly, while U.S. barrels would mean inefficiencies.
Then comes payment flexibility. Moscow accepts settlements in dirhams, yuan, and occasionally even rupees, helping India reduce its dependence on dollar reserves. Washington insists on dollar-denominated trade, tightening compliance burdens rather than easing them. In an era where India seeks autonomy in financial dealings, this makes Russian oil even more attractive.
Perhaps the most telling difference lies in politics. Russia sells oil as a transaction—no strings attached beyond trade. The U.S., however, is turning crude into a political weapon, linking access to demands: cut ties with Russia, open markets for U.S. goods, or face tariffs. For India, the choice is obvious. Moscow provides leverage and discounts without interference. Washington offers conditions and pressure with no economic upside.
In conclusion, the U.S. simply cannot match Russia’s offer on price, logistics, or political flexibility. India has every reason to stick with what serves its national interest. While diversification is wise, abandoning Russian crude to please Washington would be irrational. The sooner the U.S. understands that bullying won’t work, the better for bilateral ties. At the very least, America must meet India halfway by offering competitive pricing and terms that rival Moscow’s. Anything less, and India—especially under Modi—will not bend to Trump’s ultimatums.
