From BBC News · · 3m
India's Russian oil gamble faces 100% tariff threat
A lucrative energy deal is becoming a geopolitical liability as the US threatens massive tariffs on countries buying Russian crude.
In brief
A lucrative energy deal is becoming a geopolitical liability as the US threatens massive tariffs on countries buying Russian crude. India must weigh the $12.6bn in savings from Russian oil against the risk of up to 100% tariffs on its $104bn in annual US exports. Originally reported by BBC News.
India cashed in on Russian oil
For four years, India bought Russian crude displaced from western markets after Ukraine's invasion, often at steep discounts. This lowered import costs and gave refineries an abundant supply.
US House passes sweeping sanctions bill
The House passed legislation giving President Trump power to impose tariffs up to 100% on countries buying Russian oil and gas. The bill now goes to Trump for signature.
India is heavily exposed to tariffs
India buys 37% of Russia's crude exports, second only to China's 50%. Russia supplied 30.3% of India's crude imports in fiscal 2026, worth $40.8 billion.
Russia dominates India's oil supply
In July, Russian crude accounted for more than half of India's imports. Russia alone supplied more crude than the UAE, Saudi Arabia, Venezuela, Brazil, Oman and the US combined.
The discount advantage is fading
Russian crude no longer carries the steep discounts that made it attractive early in the war. Competition for Russian barrels has intensified while shipping, insurance and sanctions risks have risen.
Finding alternatives would cost more
India can find other crude sources, but replacing Russian oil at scale means higher crude, freight and insurance costs plus longer shipping routes. The global market could tighten further.
US tariffs would hit Indian exports
The tariff threat targets Indian exporters to America, not Russian crude entering India. The impact would ripple through exports, the rupee, refinery margins and the trade balance.
India's US trade exposure is massive
The US imported about $104 billion of goods from India in 2025. Two-way US-India trade in goods and services was roughly $240 billion, including electronics, pharmaceuticals and machinery.
India refines Russian oil for export
Indian refineries turn Russian crude into fuels exported globally. In August, India supplied about 70% of Russia's record fuel imports, mostly petrol from a Gujarat refinery worth around 78 million euros.
India's energy vulnerability runs deep
India imports more than 88% of its crude oil, with over 85% from just six countries. Strategic reserves hold only 9-10 days of imports versus 200 days in Japan and 207 in South Korea.
The savings are substantial but at risk
India saved about $12.6 billion from shifting to Russian crude after 2022. The looming tariff could turn that insurance into a liability, forcing Delhi to calculate if the savings are worth the risk.
“India buys Russian oil to secure affordable energy for 1.4 billion people, not to finance war”
Delhi faces an uncomfortable choice
India must decide how much Russian crude savings justify the risk to its $104 billion in US exports. The answer depends on discounts, global prices, freight costs and whether Trump offers exemptions.
The short version
India must weigh the $12.6bn in savings from Russian oil against the risk of up to 100% tariffs on its $104bn in annual US exports.
