US Lifts Tariffs on India, But Will New Delhi Halt Russian Oil Imports?
In a significant diplomatic move, US President Donald Trump has signed an executive order revoking the 25% penal tariffs previously imposed on India for its imports of crude oil from Russia. This decision marks a pivotal shift in trade relations between the two nations, yet it comes with a critical condition: the tariffs may be reinstated if India fails to cease purchasing oil from Russia. The executive order explicitly states that this provision is designed to ensure compliance with Washington's broader strategy to increase economic pressure on Moscow amid the ongoing conflict in Ukraine.
India's Commitment and Energy Security Priorities
According to Trump, a key element of this understanding is India's commitment to stop both direct and indirect imports of Russian crude oil. However, New Delhi has reiterated that safeguarding the energy needs and security of its 1.4 billion citizens remains its foremost priority. Throughout much of 2024 and 2025, India emerged as one of the largest purchasers of discounted Russian oil, with imports peaking at over two million barrels per day. Government sources, referencing a recent Ministry of External Affairs statement, have clarified that India's strategy focuses on diversifying energy supplies in alignment with market conditions and evolving global developments.
While Indian refiners have not yet received formal instructions to halt Russian crude imports, they have been informally advised to begin scaling back purchases. Refiners are expected to honor existing contracts, typically placed six to eight weeks in advance, but refrain from placing fresh orders thereafter. This approach underscores India's cautious balancing act between international obligations and domestic energy demands.
Expert Insights on Future Oil Flows
Industry experts believe that while Russian crude imports may decline in the coming months, the likelihood of them completely disappearing from India's crude basket appears slim. Sumit Ritolia, Lead Research Analyst at Kpler, notes that Russian volumes remain largely locked in for the next 8-10 weeks and continue to be economically critical for India's complex refining system, supported by deep discounts on Urals relative to Brent. He estimates imports will stay broadly stable in the 1.1-1.3 million barrels per day range through the first and early second quarters.
Sourav Mitra, Partner at Grant Thornton Bharat, emphasizes that India has always prioritized energy security and will continue to diversify its crude oil import basket. He points out that the oil flow from Russia to India is unlikely to vanish completely anytime soon, as strategic decisions are based on existing contractual obligations, pricing, supply chain reorientation, and refining capabilities. Though Russia's share in India's imports has fallen from a peak of around 40%, it still tops the list, and any scale-back is expected to be gradual.
Alternatives to Russian Crude for India
Before ramping up imports from Russia, India relied heavily on West Asian suppliers, with Russia contributing in lower single digits. Today, India has diversified its sources to about 40 countries, with increasing supplies from Guyana, Brazil, and Canada. Kpler's Ritolia highlights that crude sourcing diversification is expected to continue, with incremental volumes likely from the Middle East and the US as India broadens its supplier base while maintaining flexibility.
In a remote eventuality of Russian oil imports ceasing completely, Mitra suggests the import basket may reorient towards Middle East-based suppliers, led by Iraq, Saudi Arabia, and the UAE. The US is already one of the top five exporters of crude oil to India, and India could augment purchases from there depending on prices offered. African suppliers, such as Nigeria, Angola, Egypt, and Libya, also present potential alternatives, with their sweeter crude being more suitable for Indian refiners. Venezuela offers another option, but volumes may be constrained by pricing considerations and limited refining capacity for its heavy, sour grade oil.
Impact on India's Crude Import Bill
India's crude oil import stands at 4.5-5 million barrels per day, with Russian imports peaking at approximately 2 million barrels per day in June 2025 and declining to about 1.1 million barrels per day in January 2026. Mitra notes that if Russian oil purchases were to cease entirely, the adverse impact on India's crude oil import bill could range between 1-2%. However, this could be offset by ramping up purchases from Venezuela, provided discounts of $10-14 per barrel relative to Brent outweigh additional costs.
SBI Research indicates that India turned to discounted Russian oil to ensure energy security after Western sanctions, with Russia's share increasing to 35.1% in FY25. Substituting Russian crude with Venezuelan Merey 16 could have positive economic implications, as heavy crude discounts in the range of $10-12 per barrel could ensure commercial viability and potentially reduce India's fuel import bill by $3 billion. However, Mitra warns that stopping Russian imports could tighten the global crude market, with price stabilization depending on where additional Urals oil goes and how easily Venezuelan oil finds buyers.
Trade Deal Benefits and Future Outlook
With the removal of the 25% penalty tariff and a reduction in reciprocal tariffs, Indian exports to the US will now face a duty of 18%. The US has stated that India plans to acquire American energy products, technology goods, and agricultural commodities worth $500 billion over the next five years, including crude oil, liquefied natural gas, aircraft components, advanced technologies, and farm products. This signals a likely ramp-up in crude oil purchases from the US, which already constitutes around 8% of India's total oil purchases, though commercial considerations will play a key role.
As India navigates this complex landscape, the focus remains on balancing international trade agreements with the imperative of energy security for its vast population. The coming months will be critical in determining whether India can successfully reduce its reliance on Russian crude while maintaining economic stability and meeting its energy needs.
