India indicates sustained purchases of Russian oil, defying potential U.S. pressure
India's oil imports from Russia have experienced a dramatic surge since the invasion of Ukraine in February 2022, making Russia India’s largest crude oil supplier. This shift, driven by discounted oil prices amid Western sanctions, has displaced traditional West Asian suppliers like Iraq and Saudi Arabia.
The rise in Russian oil imports has significant implications for the US and the global energy market.
US-India Trade Tensions and Tariffs
In response to India’s growing reliance on Russian crude, US President Donald Trump has imposed a 25% tariff on imports from India and threatened additional penalties. This move is part of US efforts to pressure India to reduce purchases of Russian oil, which it views as indirectly funding Russia’s war in Ukraine.
Cost to India if Forced to Pivot
Analysts warn India could face a $9-11 billion annual increase in its oil import bill if it pivots away from discounted Russian crude due to US tariffs or EU restrictions, as alternatives like Middle Eastern oil are more expensive. This could increase inflation risks in India and squeeze refining margins.
Global Energy Market Dynamics
Russia's exclusion from Western markets has led it to deepen ties with Asian buyers like India. Meanwhile, Europe’s ban on imports of refined products from Russia (effective January 2026) forces Indian refiners to juggle supply segmentation and export strategies, including exporting refined fuels to Europe made from Russian-origin crude.
Russian Oil Flows and Market Fluidity
Despite US tariffs and sanctions, Russian oil shipments to Asia, including India, have remained relatively steady, though closely monitored by market watchers. The global oil market is thus adjusting to sanction-defying trade patterns that sustain Russian oil flows albeit through complex shipping and financial channels.
India's increased Russian crude purchases, from 68,000 barrels per day in January 2022 to 1.12 million barrels per day by June that year, have been facilitated by long-term oil contracts between the two countries. However, these purchases may face pressure due to the ongoing tensions between the US and Russia.
Despite the geopolitical and economic friction, India's foreign ministry has stated that its relationship with Russia is "steady and time-tested." India, with a population of 1.3 billion, is expected to become an even bigger oil consumer over the remainder of the decade due to economic growth, rising population, and demographics.
The price of Russian oil plummeted after Vladimir Putin's full-scale invasion of Ukraine. India historically bought most of its crude from Middle Eastern countries, but the price discounts and Western sanctions have made Russian oil a more attractive option. Demand in India has been rising fastest for petrol, sparked by a boom in motorcycle and car ownership due to rising household incomes.
India is the world’s third-largest crude importer. Two US nuclear submarines have been ordered by Mr. Trump to be positioned in "appropriate regions," adding another layer of geopolitical tension to the situation. The US president has pledged to end the war in Ukraine within his first 24 hours in office, but recent statements indicate a soured relationship between Mr. Trump and Mr. Putin due to the lack of progress in Ukraine.
The sanctions prompted a recent energy crisis that led to household bills in the UK soaring. The Press Trust of India cites data from analytics firm Kpler for the information about India's Russian crude imports. Western countries imposed sanctions on Russia in February 2022 to choke off funding for Moscow’s war chest. India's position on procuring energy is guided by market supply and global circumstances.
In summary, India's surge in Russian oil imports has led to geopolitical and economic friction with the US, increased import costs if India is forced to reduce these imports, and continued realignment of global oil supply chains away from traditional Western markets toward Asia. The global oil market is adjusting to sanction-defying trade patterns that sustain Russian oil flows albeit through complex shipping and financial channels.
- The US tariffs and the potential EU restrictions could force India to seek alternative sources of crude, leading to potential escalation in sports diplomacy as India might look towards purchasing oil from countries like Iran, which are under US sanctions in sports sectors.
- As the global energy market navigates the sanction-defying trade patterns, continued tensions between the US and Russia over oil imports could indirectly impact the sanctions and sports relationships that the two nations hold with other countries, potentially influencing the global sporting landscape.
