Trump and India are arguing over Russian oil. Analysis

US President Donald Trump has threatened India with 25 percent tariffs over purchases of Russian oil. Prior to that, the European Union imposed sanctions on Indian petroleum products and one of the largest refineries. Despite this, New Delhi will not be able to refuse supplies from Russia, as its economy relies on cheap tanker oil. What awaits India and what are its prospects in the sanctions dispute with the West — in the Izvestia article.

How the West punishes India

• In July, Western countries sharply increased pressure on India to limit its purchases of Russian oil. First, the European Union adopted the 18th package of sanctions. One of the measures prescribed in it is a ban on the import of petroleum products produced by refining Russian oil. Although it is not explicitly stated that this paragraph concerns India, it is India that is actively engaged in oil refining and subsequent resale of diesel fuel to Europe. In the first quarter of 2025, of the 1.8 million barrels per day that India and Turkey received from Russia, they imported 450 thousand barrels per day to the European Union in the form of diesel.

• The European Union has also imposed sanctions on the Indian oil and gas company Nayara Energy, which operates the country's second largest oil refinery. The Vadinar plant is 49% owned by Russia's Rosneft, which is also under sanctions. The company was accused of "providing substantial income to the Russian government."

• Following Europe, US President Donald Trump began to talk about sanctions against India. At first, he expressed support for the Senate bill on tariffs of 500% for those countries that purchase Russian hydrocarbons, primarily China and India. Then he threatened to impose 100% secondary duties on importers of Russian oil and petroleum products on his own if an agreement on Ukraine was not concluded within 50 days.

• The chances that any of these rates would have been accepted were extremely low, as they would effectively mean the cessation of all U.S. trade with a number of countries. As a result, Trump announced that he would impose only 25 percent duties on India from August 1. He cited the purchase of Russian energy resources and weapons, the trade imbalance between the United States and India, as well as the high barriers imposed by New Delhi on American goods as the reason for this.

What are the dangers of tariffs for India

• India has a positive trade balance with the West and a negative one with Russia and the Middle Eastern oil powers. Because of this, New Delhi is in a vulnerable position, as this condition is an irritant for Trump. If his accusations that other countries are profiting from the United States are often groundless, then in the case of India he has a real reason to complain about protectionism and exert pressure.

• India's protectionist policy is not without reason. Its rapidly developing economy remains rather weak, and its dependence on foreign oil remains high. Trump's tariffs will require New Delhi to rebuild its economy, which is trying to develop by selling cheap goods to the West instead of Chinese ones. India will strive to avoid negative consequences and demonstrate its willingness to make concessions in order to continue negotiations and preserve the opportunity to reach an agreement.

• Nevertheless, the United States is not India's defining trading partner or sole market. New Delhi can afford to reduce its export profits as long as it maintains a positive trade balance. This step may be unpleasant, but India could have been prepared for it a long time ago, because Trump has been declaring his desire to impose tariffs since the very beginning of his second term.

Why Russian oil is important for India

• Shortly after Trump's statement, information began to arrive that India's state-owned refineries such as Indian Oil Corp, Hindustan Petroleum Corp, Bharat Petroleum Corp and Mangalore Refinery Petrochemical allegedly stopped purchases of Russian oil. In return, they began buying oil on the spot market from the UAE and West African countries. In total, they control up to 60% of the total volume of oil refining in India.

• At the same time, it was Russian oil that became the key to the Indian economic miracle of the last three years. Due to this, it began to compete with China and catch up with it in terms of economic growth. Moreover, India took advantage of the fact that the sanctions hit the Western countries themselves and affected their industrial growth, and entered into a race with them. Oil from Russia is the foundation of the Indian economy, which makes it impossible to completely abandon it.

Accelerating trend: oil consistently gains in price amid threats from the United States

Trump's intentions to initiate a trade war through secondary sanctions against Russia are putting pressure on quotes

• In this regard, it is expected that the pause in the purchase of oil is a temporary measure designed to mitigate the negative consequences of the introduction of tariffs. Sooner or later, India, in an attempt to circumvent sanctions restrictions, will resume buying Russian oil in a disguised form. Until then, she will try to bargain for more comfortable terms of trade with the United States. Tariffs are a sensitive but not fatal measure for India, while without Russian oil, its entire economic model will cease to work.

• If India does switch to buying more expensive oil from other countries, it will face not only a slowdown in its own economy, but also a noticeable increase in prices. Given how poor most of the country's population is, this can cause real unrest and social tension. The current authorities, led by Prime Minister Narendra Modi, cannot afford this, so they will try to negotiate with the United States and Europe to maintain oil supplies from Russia.

When writing the material, Izvestia took into account the opinions of:

• Vasily Koltashov, Head of the Center for Political and Economic Studies;
• Dean of the Faculty of Economics of RUDN University Inna Andronova.