India's Crude Oil Supply at Risk: Understanding the US Tariff Threat

Strategic Insights -

As the United States warns of 100% secondary tariffs on countries trading with Russia, a question arises: will India's crude oil supply be impacted? India is the second-largest buyer of Russian oil, and tariffs would make it unaffordable to import crude from Russia. According to Centre for Research on Energy and Clean Air (CERA) analysis, since the ban on Russian oil, China has bought 47% of Russia's crude exports, followed by India (38%), the EU (6%), and Turkiye (6%). In FY22, Russia made up just 2.1% of India's oil imports, but by FY24-25, Russia's share in India's value of oil imports is 35.1%.

Key Takeaways:

  • India is heavily reliant on imported crude oil, with over 85% of its requirements being met through imports.
  • Since the ban on Russian oil, China has bought 47% of Russia's crude exports, followed by India (38%), the EU (6%), and Turkiye (6%).
  • In FY22, Russia made up just 2.1% of India's oil imports, but by FY24-25, Russia's share in India's value of oil imports is 35.1%.
  • India's three-pronged strategy of diversifying crude oil procurement markets, building strategic oil reserves, and securing alternative supply arrangements will help minimize the impact of potential sanctions.
  • Indian refiners are expected to maximize their purchases of discounted Russian crude before the deadline, and then secure alternative supply arrangements.
  • India's oil imports from the US increased by more than 50% during the first half of 2025 compared to H1 2024, indicating a preference for non-OPEC crude sources.
  • India's oil Minister Hardeep Singh Puri has dismissed fears of being impacted by the US tariffs, saying "I'm not worried at all. If something happens, we'll deal with it."

Statistics:

  • India's crude oil imports from Russia reached 2.08 million barrels per day (bpd) in June 2024, the highest level since July 2022.
  • India's worldwide crude oil imports declined 6% during June, while Russian shipments increased by 8% compared to the previous month.
  • India's three refineries, which also supply processed petroleum products to G7+ nations, accounted for over 50% of Russia's oil purchases.
  • The increased cost of exporting goods to the US would outweigh any benefits of discounts offered by Russia for crude oil purchases.
  • Russia's discounts on crude oil sold to India have come down gradually.
  • The secondary tariffs would impose a 100% tariff on products entering the US from countries conducting trade with Russia.

Sources:

  • "We're very, very unhappy with (Russia). And we're going to be doing very severe tariffs if we don't have a (Ukraine peace) deal in 50 days. Tariffs at about 100%, you'd call them secondary tariffs," - US President Donald Trump
  • Centre for Research on Energy and Clean Air (CERA) analysis
  • "Indian refineries may need to return to their conventional West Asian suppliers and explore new sources like Brazil to compensate for the reduction in Russian oil imports." - TOI report
  • According to industry experts, Indian refiners are expected to maximise their purchases of discounted Russian crude before the deadline
  • Gaurav Moda, Partner and Leader, Energy Sector, EY-Parthenon India
  • S&P Global Commodity Insights data
  • Times of India