India's crude oil import bill could surge by $9 billion in FY26 and potentially $11.7 billion in FY27 if the nation halts its imports of Russian oil, according to a report by the State Bank of India (SBI). This projection arises from the potential increase in oil prices if alternative sources do not compensate for the reduction in Russian supply.

Since the conflict in Ukraine began in 2022, India has significantly increased its imports of Russian crude oil, taking advantage of discounted rates following Western sanctions against Moscow. This has made Russia the largest supplier of crude oil to India, with its share of Indian imports rising to 35.1% in FY25. Before the conflict, India primarily relied on Iraq, Saudi Arabia, and the UAE for its crude oil needs.

The SBI report indicates that Russia accounts for approximately 10% of the global crude oil supply. If all countries were to cease purchasing oil from Russia, global oil prices could increase by about 10% unless other nations increase their production to fill the gap.

In response to the altered global landscape, India has diversified its crude oil sources, including suppliers from the US, West Africa, Azerbaijan, Guyana, Brazil and Canada. This diversification aims to bolster India's energy security. Should Russian oil supplies cease, India could potentially rely on its established relationships with Middle Eastern producers. However, the SBI report cautions that global price increases could still put pressure on costs, despite India's efforts to diversify its supply network.

Recently, Indian banks have started blocking payments for Russian oil imports in response to new US sanctions targeting Russia's oil industry. These sanctions have been imposed on major Russian oil companies and a large number of vessels. State-owned banks in India, such as the State Bank of India and Punjab National Bank, are reportedly being particularly cautious to avoid violating the U.S. sanctions. Private banks are purportedly adopting a more flexible approach.

Amidst these developments, state-owned oil refiners in India are reportedly reducing spot purchases of Russian crude oil as the US increases pressure on New Delhi regarding these oil flows. Companies like Indian Oil Corp., Bharat Petroleum Corp., and Hindustan Petroleum Corp. are planning to skip spot purchases of Russian crude until there is clear guidance from the government.

The US has also imposed increased tariffs on India, which President Trump has linked directly to India's continued purchase of Russian oil. The White House has stated that these tariffs are a matter of national security due to India's refusal to stop buying Russian oil.