No cheap Russian oil as imports drop 31% within year:Indian purchases rise from US, Saudi and UAE; is this due to Trump’s warning or something else?

For the first time in 4 years, India has reduced its oil purchases from Russia. A report by the Ministry of Commerce and Industry claims that Russia’s share in India’s oil imports was at 41% in September 2024, which has now decreased to 31% within a year. A major reason behind this is the 25% extra tariff imposed by the US on India. In several statements given in the past, the US President Donald Trump has claimed that India buying crude oil from Russia at a lower price and reselling it is helping Putin continue the war in Ukraine. However, this is not the only reason why India is refraining from buying Russian oil. International circumstances have changed rapidly in the last year. READ MORE | ‘Pressure on India to not buy oil from US’ Russia says it is aware ​​​​​​Here are 5 reasons India has reduced its oil imports from Russia… 1. US tariffs have reduced benefits of Russian oil, increasing losses From April 2022 to June 2025, India purchased around 1.7 to 1.9 million barrels of crude oil daily from Russia. This saved India 17 billion dollars. Due to this, the Indian companies also enjoyed major cost benefits in oil production. But buying Russian oil exposed India to Trump imposing a 25% tariff on India in August. According to an India Today report, Trump’s extra tariffs could cost Indian exports approximately 37 billion dollars, and the GDP growth rate could fall by 1%. 2. India suffers losses due to sanctions on Russian companies In November, the US imposed strict sanctions on Russia’s two largest oil companies, ‘Rosneft’ and ‘Lukoil’. These two companies were supplying almost 60% of Russia’s oil to India. This has made the import of crude oil difficult for India.
As soon as these US sanctions came into effect, any financial or non-financial dealings with these companies became illegal, which directly impacted India, as Indian refineries were most dependent on these two companies. This triggered the vicious circle of Indian banks stopping all payments, and hence Russian companies stopping the fulfillment of all purchase orders from India. 3. Russia reduced discounts After the Ukraine war, Russia started selling crude oil at a discount of $20 to $25 per barrel. At that time, the price of crude oil in the international market was $130 per barrel; hence, the cost of crude oil was affordable for India. However, now the price of crude oil in the international market is around $63 per barrel, after which Russia has also reduced its discount to $1.5 to $2 per barrel. With such a small concession, India does not enjoy the same benefits. Moreover, shipping and insurance costs are higher for bringing oil from Russia. For this reason, India is now once again buying oil from stable and reliable suppliers like Saudi Arabia, the UAE, and the US, because there is no longer a big price difference as before. 4. EU refused to take products made from Russian oil Alongside the US, the European Union (EU) has also made new rules, under which, after January 21, 2026, it will not buy products made from Russian crude oil from countries like India, Turkey, and China, including diesel, petrol, or jet fuel. This rule is part of Europe’s 18th sanction package brought to put economic pressure on Russia. Until now, India used to buy cheap Russian oil, refine it, and sell it to Europe, but now this route will be almost closed. In 2024-25, India had sold about half of the products made from Russian oil to Europe, so the new rule directly affects India. The EU also wants selling countries to provide proof that their fuel does not contain Russian oil. For this, the refineries will have to keep their crude streams separate or demonstrate that they have stopped using Russian oil for 60 days. If there is suspicion, banks can also stop financing. 5. Russia is not ready to accept payment in rupees In the last two years, India has purchased large amounts of crude oil, while India has exported very little to Russia. Due to this imbalance, a large amount of Indian rupees has accumulated in Russia. Meanwhile, Russia cannot easily exchange it for dollars, nor can it use it for trade with other countries, as the Indian rupee is not acceptable as a medium of exchange for economic transactions in the global market. 6. International transactions getting stuck in oil trade Another major issue in the oil trade from Russia is that, often, when India sends payments to Russia, transactions get stuck or take a long time to be approved, as international banks are very cautious about transactions related to Russia after the US and Europe have imposed sanctions on Russia. So a payment in dollars carries the risk of US pressure and sanctions, so sometimes money has to be sent through a bank in a third country, which further complicates the process. All this affects Indian oil companies. Even if the oil is cheap, delayed payments lead to delayed shipments. ​