Despite threats from U.S. President Donald Trump, India appears set to continue its purchase of Russian oil. This stance comes as Trump has threatened penalties, including tariffs, on countries that continue to trade with Russia.
India's Position
Indian officials have indicated that the country's oil refineries will continue to buy oil from Russia. They base their decisions on factors such as price, grade of crude, logistics, and overall economic considerations. According to Indian government sources, there has been no change in the government policy related to importing Russian oil, and no direction has been given to oil companies to cease these purchases. These are long-term contracts, making it difficult to stop purchases abruptly.
India's foreign ministry spokesperson, Randhir Jaiswal, has emphasized that India's relationships with various countries stand on their own merit and shouldn't be viewed through the lens of a third country. He also noted India has a "steady and time-tested partnership" with Russia.
Trump's Response and Rationale
Trump, on the other hand, has publicly stated that he understood India was no longer going to buy oil from Russia, calling it a "good step". However, this statement has been contradicted by Indian officials. Trump has announced a 25% tariff on Indian goods, along with a potential penalty for buying arms and energy from Russia amidst the war in Ukraine. He has also given an August 8 deadline for Russia to stop the war or risk further sanctions on tariffs on countries that import Russian oil. He has even threatened 100% tariffs on countries that buy Russian oil unless Moscow reaches a peace deal with Ukraine. Trump cited India's energy and defense ties with Russia, its trade surplus with the U.S., and barriers imposed on American goods as justification for the move.
Impact and Considerations
India, a major energy importer, has increased its reliance on Russian oil since Russia's full-scale invasion of Ukraine in 2022, taking advantage of discounted prices. Russia has become India's top oil supplier, accounting for about 35% of the country's supplies. This has helped India protect its population against rising energy costs. India defends its Russian oil imports, noting that they help avoid global price surges and are below the EU price cap, not subject to direct sanctions.
However, some reports indicate that Indian state refiners have paused Russian oil purchases due to narrowing price discounts and EU sanctions on Nayara Energy, a refinery majority-owned by Russian entities. Also, at least two vessels loaded with Russian oil bound for refiners in India have diverted to other destinations following new U.S. sanctions.
Geopolitical Context
The U.S. has been aiming to curb Russia's oil revenues in response to the conflict in Ukraine. However, Russian crude itself isn't subject to direct sanctions, and India has been buying it below the price cap fixed by the European Union. Some analysts suggest that Trump's focus on India's oil imports may be a negotiating tactic in ongoing trade talks between the two countries. Despite the pressure, India seems determined to prioritize its energy security and economic stability.
