Key Points
- Russian crude reached 51 per cent of India’s oil imports in July, up sharply since 2022
- New US law allows tariffs of up to 100 per cent on Russian oil buyers
- Indian refiners face difficulties replacing Russian crude quickly with Middle Eastern supplies
- New Delhi must choose between cheaper Russian oil and the US trade
ISLAMABAD: India’s growing reliance on Russian crude oil is facing its most serious challenge since the country sharply increased purchases from Moscow after Russia invaded Ukraine.
The pressure comes from Washington, where President Donald Trump signed the Lindsey O. Graham Sanctioning Russia and Iran Act into law on September 18.
The legislation authorises tariffs of up to 100 per cent on countries that continue buying Russian oil and gas, putting major purchasers such as India and China under pressure.
India has become one of the largest buyers of Russian crude because Moscow has offered competitive prices after Western sanctions disrupted its traditional markets.
The shift has transformed India’s crude supply structure, with Russian oil accounting for about 51 per cent of the country’s imports in July, according to recent industry data.
The attraction is straightforward. India imports most of its crude for its large refining industry. Discounted Russian supplies have substantially reduced feedstock costs and allowed the Indian refiners to maintain access to large volumes.
That advantage, however, has now become a mutually exclusive choice with the much larger value of India’s trade with the United States.
The new US legislation does not automatically impose a 100 per cent tariff on Indian goods. It gives the US administration the authority to apply such measures, leaving scope for decisions on the countries targeted, tariff levels and possible waivers.
India’s Commerce and Industry Minister Piyush Goyal said on September 21 that New Delhi was examining the details of the new US tariff provisions and would discuss the issue at an appropriate time.
The pressure is particularly significant because Washington has already linked trade policy with India’s purchases of Russian oil.
READ ALSO: India Faces 100% US Tariff Threat Over Russian Oil
In February, the White House said the United States had removed an additional 25 per cent tariff on Indian imports after New Delhi committed to stop purchasing Russian oil.
Yet replacing Russian crude is not straightforward.
Indian refiners have continued buying Russian oil despite the threat of further US measures. Industry sources cited by Mint said refiners had supplies arranged for about 45 days. “Russian crude could not be easily replaced, particularly while supplies from West Asia and the Middle East remain disrupted”, it added.
India’s complicated oil supply equation
India therefore faces a complicated supply equation. Cutting Russian purchases could increase dependence on Middle Eastern, African and other crude suppliers, potentially raising import costs if alternative barrels are more expensive.
Meanwhile, maintaining purchases could expose Indian exporters to punitive US tariffs that could outweigh the savings from cheaper crude.
The issue also surfaces at a difficult moment for the global oil market. Brent crude was trading around $100 a barrel on September 22, while continuing instability in the Middle East has kept supply risks elevated.
Russia itself is also facing pressure on its oil sector. Ukrainian attacks have disrupted Russian refining and export infrastructure. At the same time, sanctions continue to reshape the country’s traditional energy trade.
India accounted for about 37 per cent of Russia’s crude exports in August, behind China’s 50 per cent share, according to the Centre for Research on Energy and Clean Air.
For New Delhi, the Russian-oil relationship is therefore entering a different phase. What began as a commercially attractive response to sanctions and disrupted global supply chains is now tied to the tug-of-war between Washington and Moscow.
The next phase is likely to depend on how Washington exercises its new tariff authority and how quickly Indian refiners can secure economically viable alternatives. The answer will determine whether Russian crude remains a central pillar of India’s energy strategy or gradually loses the position it gained over the past four years.
