Trump puts India's Russian oil trade under scanner, but tariffs spare fuel exports to US

Analysts told PTI that the lack of any stated penalty is “a relief” for India and its energy sector. “For now, there is nothing, but you never know,” one analyst said, highlighting the uncertainty surrounding Trump’s future moves.

Trump’s statements underscore growing US unease over India’s energy ties with Moscow, especially as New Delhi has sharply increased its imports of discounted Russian crude since the Ukraine war began. From accounting for just 0.2% of India’s crude imports before February 2022, Russia now supplies between 35% to 40% of India’s total oil intake, PTI reported.

India, the world’s third-largest crude oil importer after China and the US, initially relied on the Middle East, especially Iraq and Saudi Arabia, for the bulk of its supplies. But with the onset of the Ukraine war and Western sanctions against Moscow, India turned to Russian crude offered at steep discounts. Those discounts at one point reached $40 per barrel below Brent crude, the global benchmark, though they’ve since narrowed to under $3.

In Trump’s words, cited by PTI: “India always bought a vast majority of their military equipment from Russia, and are Russia’s largest buyer of energy, along with China, at a time when everyone wants Russia to STOP THE KILLING IN UKRAINE.”

The shift in India’s crude sourcing has been dramatic. In January 2022, India imported just 68,000 barrels per day (bpd) from Russia. That same month, Iraq supplied 1.23 million bpd and Saudi Arabia 883,000 bpd. By June 2022, Russia had overtaken Iraq to become India’s top supplier, delivering 1.12 million bpd. Imports peaked at 2.15 million bpd in May 2023.

In July 2025, Russian shipments averaged 1.8 million bpd, nearly twice the 950,000 bpd received from Iraq. Imports from Saudi Arabia stood at 630,000 bpd, according to data shared by global analytics provider Kpler, cited by PTI.

The US has grown increasingly uncomfortable with this growing Russia-India energy axis, especially as India refines Russian crude into products like diesel and jet fuel for export to Western countries. Until recently, this included shipments to the European Union, which had banned direct purchases of Russian crude but not of refined products derived from it.

However, the EU has now tightened this loophole. This month, Brussels banned the import of refined oil made from Russian crude, in a bid to undercut Moscow’s earnings.

The G7’s $60 price cap on Russian oil, introduced in December 2022, was another attempt to limit Russia’s revenues while ensuring global supply remained unaffected. European companies could still transport and insure Russian oil to third countries, provided it was sold below the cap.

In July, the EU moved to lower the cap further to $47.60 per barrel and introduced a dynamic review mechanism to keep the cap 15% below average market prices going forward.

Despite mounting scrutiny, cheap Russian oil remains a boon for Indian refiners — both for domestic consumption and exports. The current exemption from US tariffs for refined fuels is thus vital for India's economy and trade balance.

But questions remain. Trump’s order may have spared oil exports for now, but his threat of an undefined "penalty" still looms. “For now, there is nothing but you never know,” as one analyst cautiously put it to PTI.