India’s state-owned oil refineries reportedly stopped buying Russian oil last week, after President Donald Trump and NATO Secretary-General Mark Rutte warned Moscow’s oil customers they could face crushing secondary sanctions for financing the war in Ukraine.
Rutte explicitly named India, China, and Brazil when he warned secondary sanctions could hit Russia’s business partners “very hard.”
Rutte advised leaders of those nations to “make the phone call to Vladimir Putin and tell him that he has to get serious about peace talks, because otherwise this will slam back on Brazil, on India and on China in a massive way.”
Trump’s demands for India to cut back on purchases of Russian oil became a centerpiece of trade negotiations with New Delhi.
On Wednesday, Trump wrote a Truth Social post slamming India for putting money in Putin’s pockets, and announced the Indians would pay 25 percent tariffs on exports to America plus an additional “penalty” for buying Russian energy and military products.
“They have 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 — ALL THINGS NOT GOOD!” Trump wrote.
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Secretary of State Marco Rubio said on Friday that India has huge energy needs that make discounted Russian oil attractive, but India must understand that its economic relationship with Putin’s regime is fueling the bloodshed in Ukraine.
“I think what you’re seeing the President express is the very clear frustration that with so many other oil vendors available, India continues to buy so much from Russia,” Rubio said.
Adding to the Trump administration’s frustration was Petroleum Minister Hardeep Singh Puri’s blithe assertion in mid-July that India could easily make do without oil from Russia, which currently furnishes over a third of India’s energy imports.
“I’m not worried at all. If something happens, we’ll deal with it,” Puri said, waving aside the threat of tariffs and sanctions. “India has diversified the sources of supply and we have gone, I think, from about 27 countries that we used to buy from to about 40 countries now.”
India dramatically increased its reliance on Russian oil after Putin invaded Ukraine in 2022. Russia offered huge discounts to anyone still willing to buy its products. India and China, ravenous for fossil fuel energy, leaped at the opportunity.
Before Russia invaded Ukraine in February 2022, India was getting about 0.2 percent of its oil from Russia. Six months later, India was importing 45 percent of its oil from Russia, pouring $275 billion a year into Putin’s coffers. India’s old suppliers, like Iraq and Saudi Arabia, found themselves pushed aside while Indian refineries guzzled cheap Russian crude.
Puri’s remarks, and other public comments from Indian officials, made it sound like India was ready to return to its own suppliers to avoid sanctions and seal a trade deal with the Trump administration. Instead, as Trump and Rubio’s comments indicated, the Indians became remarkably stubborn about buying oil from Moscow, even though the discounts have grown lower over the past few months.
Analysts say India would pay $10 dollars more per barrel if they cut off Russian oil imports, adding about $14 billion to annual energy costs – a significant sum, to be sure, but seemingly not worth the pain India will endure from Trump’s tariffs and additional penalties.
The total cost to India of breaking off from Russia would be somewhat higher if other products linked to the price of oil, such as liquid natural gas (LNG), also grew more expensive with the end of Russian discounts. Those increased costs could tack another $5 billion to $6 billion on India’s energy bill.
There are political considerations beyond the economic impact. India has always maintained close relations and brisk trade with Russia, even as it pivoted more toward the West under Prime Minister Narendra Modi. Losing India’s oil revenue would be devastating for Putin’s war effort and therefore damaging to relations between New Delhi and Moscow.
India also remains heavily reliant upon Russia for military supplies. Russia’s military exports to India reached a record high of $80 billion last year, even as India sought to “diversify” its military supply chain.
India’s relations with Pakistan have been extremely tense since they came to the brink of war in May over a terrorist attack in Kashmir, the disputed territory partially controlled by each nation. Indian officials are concerned that President Trump is building better relations with the Pakistanis, culminating in a trade deal announced by Trump and Pakistani officials on Thursday – even as Trump was preparing to hit India with 25 percent tariffs for failing to make a deal.
At a time of such high tensions, with a faltering sense that America would unconditionally support India in a conflict with Pakistan, Indian officials will be reluctant to jeopardize their arms supplies from Russia. If India stops buying Russian oil, it will almost certainly have trouble buying Russian weapons.
With all of these factors in mind, Indian state oil refineries nevertheless paused their purchases of Russian crude last week. State refiners account for roughly 40 percent of India’s oil imports from Russia, while private companies buy the other 60 percent.
The Deccan Herald reported on Thursday that India’s state refineries quietly shifted their business to Middle Eastern and West African suppliers as Russia’s discounts shrank, and political pressure to stop buying oil from Russia mounted. India’s state refiners are also concerned that buying Russian oil could complicate their trade and investment relations with European Union (EU) countries.
The Deccan Herald noted that one of India’s big private refiners, Reliance Industries, also made a surprising purchase of Abu Dhabi oil in July, although it has not officially canceled its annual contracts with Russia.
NDTV pointed out a major difference of opinion between India’s energy ministers, who seem confident they could absorb the cost of losing those Russian discounts, and political figures such as Foreign Minister S. Jaishankar, who are refusing to stop doing business with Russia because Trump, NATO, and the EU demand it.
Jaishankar railed against the Europeans last year for their hypocrisy in criticizing India while they were buying Russian gas.
“If India buying Russian oil is funding the war — tell me, then, is buying Russian gas not funding the war? It’s only Indian money and Russian oil coming to India funding the war, and not Russia’s gas coming to Europe, not funding? Let’s be a little more even-handed,” he complained.
This difference of viewpoints between the economic and political wings of the Indian government might help to explain why India’s refiners are quietly backing away from Russian exports, even as its foreign ministry angrily insists it will buy oil anywhere it pleases, no matter what penalties President Trump threatens to impose.
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