Despite warnings from US President Donald Trump about “penalties,” India appears set to continue its imports of Russian oil, presenting a significant diplomatic challenge.
Although Trump informed reporters on Friday that he “heard” India would cease oil purchases, New Delhi’s officials have maintained a noncommittal stance.
Randhir Jaiswal, the foreign ministry spokesperson, stated that India determines its energy import sources “based on the price at which oil is available in the international market and depending on the global situation at that time,” according to a CNBC report.
Change of US stance under Trump
“The Indians must be having some confusion”, following Trump’s threat — a reversal from the more tolerant approach taken under the Biden administration, Bob McNally, president of consulting firm Rapidan Energy Group, told CNBC.
McNally said:
Now we’re flipping around and saying, ‘What are you doing taking all this Russian oil?’.
In March 2022, a month after Russia’s full-scale invasion of Ukraine, Daleep Singh, then a US deputy national security adviser for international economics in the Biden administration, reportedly stated, “friends don’t set red lines” and “there is no prohibition at present on energy imports from Russia.”
“What we would not like to see is a rapid acceleration of India’s imports from Russia as it relates to energy or any other exports that are currently being prohibited by us or by other aspects of the international sanctions regime,” Singh said.
On July 30, Trump announced that India would face a 25% tariff starting August 1.
He also mentioned an unspecified “penalty” due to India’s purchase of Russian oil and military equipment.
India, the world’s third-largest energy consumer, is reportedly maintaining its stance on energy contracts.
According to a Reuters report, there are no immediate alterations planned for India’s long-term agreements with Russian suppliers, due to the sensitive nature of the information.
Indian imports of Russian oil rise
Since the start of the war in Ukraine, Russia has become India’s primary oil supplier.
Before the invasion, Russia supplied less than 100,000 barrels per day, accounting for 2.5% of India’s total oil imports.
This increased significantly to over 1.8 million barrels per day in 2023, representing 39% of imports.
The International Energy Agency reported that 70% of Russian crude oil was exported to India in 2024.
On July 10, India’s energy minister, Hardeep Singh Puri, defended New Delhi’s stance, asserting that it contributed to stabilising global prices and received encouragement from the US.
If people or countries had stopped buying at that stage, the price of oil would have gone up to 130 dollars a barrel.
That was a situation in which we were advised, including by our friends in the United States, to please buy Russian oil, but within the price cap.
Pressure on India
In December 2022, the Group of Seven nations, representing the world’s leading economies, set a price cap of $60 per barrel on Russian oil exports. The European Union further reduced this price cap to just over $47 per barrel in July.
According to Vishnu Varathan, Managing Director at Mizuho Securities, India faces a “clear and present danger” due to US threats.
He believes New Delhi will likely avoid committing to oil purchases as it weighs the pros and cons of using the “Russia option” as a bargaining tool, even as pressure continues to mount.
Varathan, who also heads macro research for Asia ex-Japan, noted that India would need to search the global market for oil deals comparable to those offered by Russia.
Varathan suggested New Delhi could explore alternatives, such as Iran, provided a US exemption can be negotiated.
Additionally, other producers “either within or outside of OPEC+ that have been pressured by the US” might also be considered.
Amid escalating concerns regarding potential supply disruptions emanating from Russia, the OPEC+ alliance reached an agreement on Sunday to increase oil output by 547,000 barrels per day in September.
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