Indian Refiners to Scale Back Russian Oil Purchases Amid Rising US Tariffs

Indian Refiners to Scale Back Russian Oil Purchases Amid Rising US Tariffs

Indian refiners, including major players such as Reliance Industries Ltd. and state-run refiners like Indian Oil Corporation, Bharat Petroleum, and Hindustan Petroleum, are planning to modestly reduce their purchases of Russian crude oil in the coming weeks. This move comes as a direct response to increasing pressure from the United States, which has doubled tariffs on Indian imports effective from August 27, 2025, targeting India’s rising crude oil imports from Russia specifically.

Context of the Reduction

India has been one of the largest buyers of Russian crude since Russia's invasion of Ukraine in 2022. The discount on Russian oil compared to Middle Eastern and other global suppliers has made Russia the largest source of crude for India, accounting for roughly 35-40% of its total imports in 2025. Earlier in the year, Indian refiners imported around 1.8 million barrels per day of Russian crude, but this is now expected to come down to about 1.4 to 1.6 million barrels per day for October loading and beyond.

Geopolitical and Economic Pressures

The Trump administration has been strongly urging India to reduce its purchase of discounted Russian crude, accusing the country of acting as a “laundromat” facilitating Russia's oil revenues amid the ongoing Ukraine conflict. As part of this pressure campaign, the US Department of Homeland Security announced doubling tariffs on Indian imports to 50%, which is slated to take effect starting August 27, 2025.

This tariff hike aims to narrow the US trade deficit with India as well as to penalize India for its sizeable imports of Russian oil, which Washington views as undermining Western sanctions imposed on Moscow. The tariff pressure has led Indian refiners to seek alternative sources of crude, looking more towards the Middle East, the US, and Brazil.

India's Balancing Act

Despite the intended reduction, India's trimming of Russian crude purchases is seen more as a modest concession than a decisive break with Moscow. India continues to balance its energy security, economic interests, and geopolitical considerations carefully. While the reduction may ease trade tensions slightly with the US, there is no indication that India plans to sever its ties with Russia completely, especially given the favorable pricing and supply stability that Russian crude has provided.

Impact on Russian Oil Supply Dynamics

With India scaling back its purchases somewhat, other buyers, particularly China, have stepped up to fill the gap, securing additional shipments of Russian crude. India's attempt to diversify its crude oil portfolio to include more non-Russian sources is ongoing, but Russian oil remains a critical component of its import strategy.

This situation highlights the increasing complexity of international energy trade amid geopolitical conflicts and economic sanctions, where India navigates between maintaining strong energy supplies and managing diplomatic relations with global powers like the US and Russia.