Russia's oil exports surge to China due to decreased demand from India, impacted by Trump's tariffs
In a significant shift in global oil markets, India is scaling back its purchases of Russian crude oil primarily due to increasing U.S. tariff pressure. The Trump administration has imposed a 50% tariff on Indian goods linked to Russian oil imports, creating economic disincentives for Indian refiners [1][2][3].
The U.S. justifies the tariffs by stating that India's Russian oil purchases indirectly fund Russia's war in Ukraine. However, India feels unfairly targeted and is weighing its options amid these tensions. Although India continues to buy some Russian oil for energy security reasons, state refiners are cautious, reducing purchases and seeking only distressed cargoes due to narrowed price discounts on Russian Urals crude [1].
Meanwhile, China's stance contrasts with India's. China has often alternated with India as one of the top buyers of Russian seaborne crude since early 2022 [2]. As India pulls back somewhat due to U.S. pressure, China may maintain or even increase its purchases, potentially absorbing some market share.
Before the recent cuts, Russian supplies accounted for 36% of India's market, making it the largest source of crude for India [4]. The price of Russian oil remains at least $3 per barrel cheaper than Middle Eastern alternatives, and these supplies usually go to India instead of China, given its distance [4]. However, India buys around 1.7 million barrels per day from Russia, while China purchases only about 1.2 million barrels of seaborne Russian oil per day [4].
India's oil tanker trucks were seen outside an oil refinery operated by Bharat Petroleum Corp. Ltd., in Mumbai, India, on Friday, April 4, 2025 [4]. The buying of Russian crude by Chinese refineries is described as an "opportunistic" move [4].
The U.S. has indicated that India could get a 25% tariff reduction if it stops buying Russian oil outright, showing ongoing pressure to cut off such imports fully [4]. It is yet to be seen how this situation will unfold, but it is clear that the U.S.-India economic relations are being strained as India navigates these complex geopolitical and economic challenges.
| Aspect | India | China | |------------------------------|--------------------------------------------------|------------------------------------------------| | Russian oil imports | Reducing purchases amid U.S. 50% tariffs; discounts narrowed; reluctant cuts due to energy security and cost concerns [1][3] | Remains one of the top buyers, possibly increasing purchases as India reduces imports [2] | | Reason for India reduction | U.S. tariffs on Indian goods over Russian oil buys; economic and diplomatic pressure [1][2][3] | No direct U.S. tariffs, maintaining strategic imports from Russia [2] | | Impact | Strained U.S.-India economic relations; potential increased economic ties with China and Russia in response to U.S. sanctions and tariffs [2] | Gains potential advantage in Russian market share [2] |
[1] Source: Reuters [2] Source: Bloomberg [3] Source: The Hindu [4] Source: The Wall Street Journal
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