"Éramos" is imperfect indicative and "fuéramos", imperfect subjunctive.
- Él me preguntó si éramos primos.
In the sentence above, "si" introduces a reported question, and the verb is used in the indicative because it is merely the backshifted form of the direct question, also in the indicative mood:
- Él me preguntó: ¿Son primos ustedes? (In Spain: ¿Sois primos vosotros? = Are you cousins?)
- Él me pregunto si éramos primos. (This "éramos" is equivalent to real past "were": He asked me if we were cousins)
For the subjunctive "fuéramos" to be used, there needs to be some special subordinating conjunction expressing doubt or uncertainty. In this case, "were" expresses unreal or hypothetical past:
Si fuéramos primos, nos llevaríamos bien. (If we were cousins -- which is not the case --, we would get along well.)
Aunque fuéramos primos, seguiríamos discutiendo. (Even if we were cousins -- which we are not --, we would keep on quarrelling.)
For "fuéramos" to be used after "if" in reported speech, a conditional sentence should be reported, for example:
- El me preguntó: ¿Qué harían si fueran primos ? (He asked me: What would you do if you were cousins?)
Indirect speech: Él me preguntó qué haríamos si fuéramos primos. (He asked me what we would do if we were cousins.)