India Halts Purchases of Russian Oil Amid Pressure

State-owned oil refineries in India reportedly stopped buying Russian oil last week following warnings from President Donald Trump and NATO Secretary-General Mark Latte. They cautioned that clients of Russian oil might face secondary sanctions aimed at supporting the war in Ukraine.

Latte openly addressed leaders from India, China, and Brazil, indicating that secondary sanctions could significantly impact Russian business partners. He emphasized the need for these nations to engage seriously in peace talks with Russia.

Trump’s insistence on India reducing its Russian oil purchases has been a focal point in trade discussions with New Delhi. Recently, Trump criticized India on his social platform, accusing it of financially supporting Putin. He pointed out that India’s continued purchases of Russian energy and military products, alongside hefty import tariffs to the U.S., are problematic.

“They often buy the majority of their military equipment from Russia and are among its biggest energy clients alongside China—all while Russia continues its aggression in Ukraine,” Trump remarked.

Secretary of State Marco Rubio shared his thoughts, noting that India has substantial energy needs, which can make Russian oil appealing. However, he warned that engaging with Putin’s regime is essentially contributing to the ongoing violence in Ukraine.

“The Presidential Express has been pretty clear; many other oil suppliers have the same access as India but continue to make significant purchases from Russia,” Rubio stated.

Following complaints from the Trump administration, Indian Oil Minister Hardeep Singh Puri claimed that India could manage its energy needs without relying on Russian oil, which currently makes up over a third of its imports. “I’m not worried at all. If something happens, we’ll handle it,” he assured, mentioning that India now sources oil from around 40 countries, up from about 27.

After Russia’s invasion of Ukraine, India’s dependence on Russian oil soared, from roughly 0.2% before the conflict to 45%. This shift amounted to an expenditure of about $275 billion annually into Russian coffers. Traditional suppliers like Iraq and Saudi Arabia are now sidelined as Indian refineries increasingly opt for cheaper Russian crude.

Puri’s statements, alongside other remarks from Indian officials, suggest a potential pivot back to former suppliers to avoid sanctions and ease trade relations with the Trump administration. Yet, in light of recent comments from Trump and Rubio, it appears India’s commitment to purchasing Russian oil is quite firm, even as prices have stabilized.

Analysts project that if India ceases its Russian oil imports, it could incur an additional $10 per barrel, increasing annual energy costs by about $14 billion. Prices of other oil-linked products, including LNG, may also spike, adding further financial strain.

Beyond economic factors, there are political implications. India has maintained a close relationship with Russia, especially under Prime Minister Narendra Modi, even while shifting more towards the West. A reduction in oil revenues from India would adversely affect Putin’s military efforts, straining ties between New Delhi and Moscow.

India is also heavily reliant on Russia for military supplies. Records show military exports from Russia to India peaked at $80 billion last year, complicating any attempts to diversify military sources.

With ongoing tensions with Pakistan, especially after recent conflicts, Indian officials are wary about jeopardizing their arms supplies from Russia during such a sensitive period. If India halts oil purchases, securing Russian weapons could become quite difficult.

Consequently, Indian state refineries put a pause on their Russian oil imports last week, with state-owned entities accounting for about 40% of those imports while private firms cover the remaining 60%.

Reports indicate that state refiners have shifted their focus to suppliers in the Middle East and West Africa amidst falling discounts and increasing political pressure to cease Russian oil purchases. They seem concerned that continuing these imports might complicate investments and trade relations with the European Union.

Some private refiners, like Reliance Industries, reportedly sourced oil from Abu Dhabi in July but have not officially canceled contracts with Russia. Energy ministers in India are confident they can absorb any losses from ending reliance on Russian discounts.

Last year, India’s Foreign Minister drew attention to European countries criticized India while they themselves were buying Russian gas. “If India, purchasing Russian oil, is accused of funding the war, doesn’t that make European gas purchases equally culpable?” he questioned.

This difference in viewpoint among India’s economic and political factions might help clarify why refiners are quietly backtracking on Russian imports, even when the Foreign Ministry expresses frustration over potential sanctions from Trump.