"Now it's business, not friendship." Russia ends discounted oil sales to India

Russian President Vladimir Putin told Indian Prime Minister Narendra Modi, “No more Mr Nice Guy. It’s just business now,” after the US softened sanctions on India’s purchase of Russian oil to alleviate a growing supply side squeeze.

Previously selling India oil at a deep discount, the Kremlin now says it will have to pay full price as it starts to cash in on the unfolding chaos on the international energy markets, caused by the start of Operation Epic Fury on February 28.

“You stopped buying our oil without informing us… Now suddenly you want it again?” Putin said in remarks directed at the Indian government. “Now it’s business, not friendship.”

Putin said any future oil sales to India would be conducted on purely commercial terms rather than at the previous preferential prices.

The Kremlin is punishing New Delhi for caving in to the Trump administration’s pressure to cut its imports of Russian oil. Trump doubled tariffs on India in August to 50% after it defied earlier calls to end oil imports from Russia. India said it had been following its own national interests and had been benefiting from discounts of up to $20 a barrel until Trump turned the tariffs screw.

In recent months as the White House increased the pressure on New Delhi and threatened even more extreme tariffs, Indian refineries cut orders from Russia and actively looked for alternative supplies. Russia was left with hundreds of thousands of barrels of oil without a home, many of which are currently stored on ships at sea.

Since the beginning of Operation Epic Fury and the closure of the Straits of Hormuz on March 2, the market is missing some 20mn barrels a day of Gulf production. India has been particularly hard hit by the rising prices and was importing about 5mbpd in 2025. To create more supply for the rest of the world, the White House has allowed India to increase its imports of Russian oil in the hopes of alleviating the market pressure and bringing prices down. The US government last week agreed to a 30-day waiver on the ban on buying Russian oil and India is preparing to snap up the seabound oil.

Russia and India have enjoyed particularly good relations in the last few years, and Putin signed off on a new “no limits” deal with New Delhi in December. However, clearly the Kremlin was not happy with India's decision to cave in to Trump's pressure and now it's taking its pound of flesh.

The price of oil has jumped from around $65 per barrel at the end of January to $92 as of March 8. Moreover, the discount of up to $20 that Russia was forced to offer prior to the outbreak of war in the Middle East has entirely disappeared and Russia’s premium Urals blend was trading a $4-$5 premium to the benchmark Brent for Indian delivery at the end of last week. Russia is now one of the few major oil producers that has no physical exposure to the Iran war and its transport network is able to entirely avoid the region. It typically exports 5mbpd, which is enough to make up for a quarter of the 20mbpd that is now bottled up in the Gulf.

Since Western sanctions were imposed on Russia following the invasion of Ukraine in 2022, India had become one of the largest buyers of Russian crude, taking advantage of deep discounts to replace more expensive Middle Eastern grades, although as bne IntelliNews reported, until the most recent new oil sanctions those discounts had been narrowing steadily.

Russia is taking a similar line with Europe as the market shake up causes new opportunities and boosts demand for Russian oil. Putin last week turned the tables on the EU and said that if Europe wants to ban the import of Russian LNG then the Kremlin has no problem with that. If they don’t want it then Russia will ban exports to Russia, just as the growing gas crisis is likely to leave Europe short of enough gas to refill its storage tanks this summer, and sell it to friendly countries instead.

Russia announced on March 6 it will redirect gas supplies from Europe to China, India, Thailand, and the Philippines. Deputy Prime Minister Novak confirmed negotiations are underway. Three LNG tankers have already diverted mid-voyage from European ports to Asian buyers offering higher spot prices. Despite its threats, the EU still counts on Russian LNG imports which make up 13% of its gas imports. And those rose last year.