India appears set to scale back purchases of Russian oil. Industry sources said Thursday that Indian refiners are preparing to sharply reduce imports from two major Russian producers to comply with new U.S. sanctions—potentially clearing a significant hurdle for a trade deal with the United States.
“There will be a massive cut. We don’t anticipate it will go to zero immediately as there will be some barrels coming into the market” via intermediaries, a refinery source said, declining to be named as they were not authorized to speak with media.
READ: The tariff tiff: Why India and the US need a trade breakthrough (
Wednesday’s sanctions, the first of President Donald Trump’s second term targeting Russia over its actions in Ukraine, come as his frustration grows with Russian President Vladimir Putin.
“If the Trump administration does indeed back today’s words by action, we anticipate that refiners seeking to retain access to U.S. capital markets will forego Russian barrels,” RBC Capital analyst Helima Croft wrote in a note.
These U.S. sanctions, effective until late November 2025, have put pressure on Indian refiners, especially Reliance Industries, which reportedly may halt its long-term Russian oil contracts. State-run Indian refiners are also reviewing their contracts to ensure compliance with these restrictions.
Russian crude has historically made up about 30-35% of India’s total oil imports, providing a cost-effective supply due to heavy discounts compared to Middle Eastern grades. However, these discounts have narrowed recently, diminishing the price advantage. India’s energy sector faces a complex challenge: balancing the need for affordable crude to fuel its growing economy while navigating geopolitical risks linked to U.S. sanctions.
READ: H-1B backlash erupts on social media as US-India trade war escalates (
Reducing Russian imports could increase India’s crude costs as it seeks alternatives, potentially leading to higher fuel prices domestically. The U.S. claims that India may nearly eliminate Russian oil imports by the end of the year, although India has not formally committed to a full cutoff, emphasizing commercial considerations.
Globally, this shift could tighten oil supplies elsewhere, contributing to rising prices. For Russia, losing India as a major buyer would strain its oil revenues, impacting its economy amid ongoing geopolitical tensions. The situation remains fluid as India’s refiners adapt to the new sanctions landscape.
The potential reduction of Russian oil imports by India marks a significant shift in global energy dynamics. For India, this move reflects the delicate balance between securing affordable energy to fuel its growing economy and navigating complex geopolitical pressures, particularly from the United States.
While Russian crude has historically offered cost advantages, shrinking discounts and increasing sanctions compel Indian refiners to reconsider their sourcing strategies, potentially leading to higher domestic fuel costs. For Russia, India has been a crucial buyer, helping sustain its oil revenues amid Western sanctions. A sharp cutback from India would further strain Russia’s economy and limit its oil export options, intensifying financial and geopolitical challenges.