Amidst the increasing tension between America, Israel and Iran, India has got a big relief. According to reports, the US has granted a temporary waiver regarding Iranian oil. This development has opened the way for Indian refiners to resume imports. At a time when the global energy crisis is putting immense pressure on supply chains, the move could have a profound impact on India’s oil procurement strategy. Now the biggest question is: Will Iranian oil prove to be cheaper than the oil currently being purchased from Russia and Saudi Arabia? Let’s find out.
A big effort from Iran
Iran is making every effort to regain its lost market share. In this endeavour, prices are its biggest strength. According to reports, Iran is offering heavy discounts to attract buyers like India. With approximately 170 million barrels of crude oil currently stored in floating storage, Tehran is under immense pressure to sell these reserves as quickly as possible. As a result, Iranian oil prices are expected to be highly competitive—potentially on par with, or even lower than, the cost of Russian crude.
Declining profits from Russia
Over the past two years, Russia has emerged as India’s largest oil supplier. The main reason for this increase was heavy discounting. However, now this profit has started decreasing. Since the beginning of 2026, discounts offered on Russian crude have seen a sharp decline. Previously, these discounts ranged from about $10 to $13 per barrel; Now it has come down to just $4 to $5 per barrel. Additionally, logistics challenges—such as sanctions, insurance barriers, and long shipping routes—are increasing the overall cost of imports.
benefits from saudi arabia
Saudi Arabia remains a stable and reliable supplier to India. However, this reliability comes at a cost. Saudi crude oil is usually sold at official rates, without the benefit of deep discounts. As a result, it is 7% to 12% more expensive than oil purchased from Russia or Iran. Nevertheless, its supply remains consistent and geopolitically secure.
Iran: closer to India
Geography plays an important role in determining cost. Iran is located very close to India; As a result, both the time taken to transport oil and the cost of freight—are significantly lower than importing it from Russia. To bring oil from Russia one has to travel a long distance. Lower transportation costs mean more savings for India; This makes Iranian oil an even more economically advantageous option.
Additionally, there is another distinct advantage to importing from Iran: the availability of alternative methods of payment—in particular, the ‘rupee-riyal system’. With its help, India is able to reduce its dependence on the US dollar for trade transactions.
