What do Ukrainian drone strikes targeting Russian refineries, Saudi avarice for market shares in Asia, the European Union’s tightening of financial sanctions on Russian oil, and increased Russian aggression in Ukraine, as well as against Europe, all have in common? They are all intersecting to facilitate a calibration in India’s approach to purchasing Russian oil in the coming months, thereby creating the ground for lifting the 25 per cent additional tariffs that US President Donald Trump had imposed on India.
This is somewhat contrary to recent reports and pronouncements that India is pivoting more toward Russia, and maintaining (if not increasing the purchase of Russian oil). Growing and intersecting trends indicate the opposite. But the relation between US tariffs and purchases of Russian oil is more nuanced than the public discourse suggests. Let us begin with that correlation first.
Rationale behind the additional tariff
Trump’s 25 per cent additional tariff, targeting India allegedly over Russian oil purchases, and fuelling the Ukraine war, has as much to do with perception management vis-à-vis expectations of a tougher line on Moscow (both domestically as well as vis-à-vis European partners) as with achieving real strategic victories against Russia. In other words, Trump has been remarkably hesitant to apply substantive pressure on Russia either militarily or economically and for reasons that may be valid but still not fully known.
Perhaps the Trump administration hopes that a conciliatory approach will finally persuade Vladimir Putin to a genuine ceasefire and peace talks. In the absence of a ‘stick’ and after the delivery of many carrots, tariffs on India (along with similar tariff threats against China) could be the ‘hard action’ against Russia that Trump had implicitly promised for months and has the appetite for delivering. To the degree that this is the case, the US is less concerned with India actually cutting off Russian oil purchases and more with getting New Delhi to show a ‘scaling down’ that Trump can tout as a win.
If anything, there is a gradual realisation in Europe in recent weeks that Trump does not intend to adopt a ‘hardline’ approach on Russia. Moscow’s intensified drone attacks in Ukraine, and the breach of Poland’s airspace through drones (a NATO member) since the Alaska summit, make Trump’s threats of economic actions against Russia seem largely ‘performative’. The US administration’s funding cuts to key air defence support programmes in the Baltic states at such a sensitive time reenforces this view. In this evolving context, sanctions against India (as well as China) delivers decreasing political mileage as scepticism grows.
Trump’s recent statements urging the European Union (EU) to impose tariffs on China and India—knowing that such a step is extremely unlikely—again indicate that he is as interested in evading calls for US action as he is in weakening Russia. The political rationale for the additional tariffs is weakening, and Trump might want to declare ‘success’ and move on.
Such motivations suggest that a tacit agreement between India and the US on the issue of Russian oil is more plausible now. However, Given how often the US President has referred to tariffs on India as his ‘tough action’ against Russia, the White House will find it very unpalatable to lift the additional tariffs without an “off-ramp”. But is India in a position to provide such an off–ramp? A few growing trends may suggest it might be.
Also read: The problem with India’s exports isn’t just Trump tariff. It’s the PCI
India’s strategic autonomy doctrine remains flexible
India has repeatedly said that it buys oil based on commercial factors. On this issue, India’s strategic autonomy essentially amounts to our right to enter into beneficial commercial decisions, and in alignment with national interests. India’s purchase of Russian oil—since March 2022—has largely depended on the discount Moscow offers, especially vis-à-vis alternatives. Hence, if market conditions change tomorrow, then so would India’s choices, as has been the norm since 2022, with purchases declining proportionate to reduced discounts.
There are at least four emerging markets/geopolitical conditions at present that point towards calibration: the spectre as well as the reality of the EU’s 18th sanctions package, Ukraine’s increasing attacks on Russian refineries, Trump’s tariffs themselves and declining global oil prices amid low demand.
EU sanctions & Kyiv drone attacks
The EU price cap and sanctions package will pose strong complications to the sale of refined Russian crude products. The sanctions package is likely to come into effect by January 2026, and it comprises import bans on Russian crude-derived fuels. The EU has represented 25 to 30 per cent of recycled Russian crude from India on average. The potential loss of this market partially undercuts the profit motive behind Russian purchases. Meanwhile, EU sanctions in recent weeks and months have deterred Gulf crude exports to certain companies in India while also encouraging others to desist from engaging sanctioned tankers. Such complications have driven Indian refineries to demand much higher Russian demands in recent weeks. India’s present uptick in relations with the EU, illustrated by growing momentum toward a Free Trade Agreement (FTA), also reinforces (albeit mildly) stronger caution on Russian oil purchases.
Meanwhile, Ukraine’s increasing attacks on Russian oil infrastructure (mainly refineries) since early this year have reportedly depleted 20 per cent of Russia’s refining capabilities. This has two kinds of consequences for India. In the short term, lesser Russian refining capability will drive the country toward offering greater discounts for crude to India; hence, it will also rely more on Indian refineries to process the crude and to avoid storage overflows.
The recent uptick in purchases is in part explained by such attacks and resultant urgent discounts. However, if Ukraine steps up similar attacks in the coming weeks and Russia fails to mitigate against the same, then its ability to sustain export quantities will be challenged. Russia’s recent rare call for investments in the Russian energy sector, and the increasing tempo of maintenance operations, do indicate signs of dormant stress.
Also read: US officials know that New Delhi can’t be coerced. India thinks it’s an equal partner
Saudi Arabia’s ‘market capture’ strategy
The last great price war between Saudi Arabia and Russia took place in 2020, at great expense to both Russian and Saudi coffers. It was only terminated under strong US pressure as it sought to protect Shale oil exports. Russia is unarguably in a worse position to compete in a price war in 2025 than in 2020.
What has occurred over the last year is a subtler but more sustained price war—Saudi Arabia gradually reduced oil prices to crowd out Russian oil and secure longer-term contracts in Asia. Saudi oil prices have shifted from $82 per barrel in January this year to close to $62 per barrel in September. According to estimates, the figures could come down to $55 by the end of the year or early next year. Incidentally, such a steep fall seriously threatens Russia’s war funds while also making Russian exports to Asian countries less lucrative (compared to 2022 and 2023). Incidentally, India’s savings from buying discounted Russian oil have been shrinking in any case from $6 to $8 billion in 2022 to $1.8 to $2.5 billion this year—a system whereby India stabilises global oil prices with decreasing benefit for itself and while incurring moral opprobrium as well as US tariffs.
India pivoted away from Gulf crude in February/March 2022 in response to skyrocketing prices, hitting $130 per barrel in March 2022. Russian discount offers enabled India to reduce the toll on its import bill as well as safeguard Indian citizens from inflation. However, due to a complex variety of reasons related to the Organization of the Petroleum Exporting Countries (OPEC+) disunity, global demand slowdown amid growing production, and threats from falling cost of renewables, Gulf crude has seen a strong decline in prices since early 2025. Incidentally, Riyadh is motivated by the need to secure long-term contracts by offering lower prices to secure future markets, achieve fiscal goals internally and elbow out both competition as well as ‘cheating’ within OPEC+ (especially Russian oil).
Goldman Sachs, JPMorgan, and the International Energy Agency (IEA) estimate that global oil prices (Brent, OPEC+, US WTI) are all likely to decline in 2026, potentially dropping to 55USD per barrel or even lower. This leaves Russian discounts (at present rates) much less lucrative.
Equally important, falling global oil prices together with geopolitical shifts (EU sanctions and US tariffs) give India and its companies both the rationale and the capacity, backed by year-long estimates, to hedge by recalibrating their crude import basket.
In this scenario, India does not ‘pause’ or ‘halt’ imports of Russian oil, but scales down purchases by 10 to 20 per cent to achieve a greater balance between Gulf, American and Russian crude in its import bag.
Common ground achievable?
A combination of factors is making it more necessary for India to hedge against instability related to Russian oil through greater calibration and toward re-diversification. At the same time, global economic trends are also making such a calibration less costly via more competitive pricing for alternatives.
Russia’s ability to provide massive discounts will strongly tempt Indian companies to avail them. However, India’s long-term investments with Europe, the Gulf and the US will also be weighed in while making key decisions in the coming weeks and months. Notably, a senior official in one of the top oil-importing Indian companies recently stated that “no new orders” had been placed for Russian oil by the company in September so far. “The oil that will come in November will be orders placed in September,” he added. In other words, there is a strong possibility that inflows of Russian oil will be visibly less in November compared to September.
Hence, by early November, India may recalibrate its oil import strategy, mainly for ‘commercial reasons’ and in line with the country’s strategic autonomy. Saudi discount offers aimed at longer-term contracts with India could be the clincher as well. Trump could convince constituencies within the US as well as European allies that it was his ‘tariff pressure’ that ‘compelled’ India to ‘scale down’ its purchases of Russian oil—regardless of its perceptible impact on Russia’s conduct of war in Ukraine or the exaggeration in the statement. Even without a parallel agreement on trade, such alterations—aided by the above-mentioned overlapping trends—could theoretically see the 25 per cent additional tariffs being lifted and placing India-US relations on a more stable footing.
Sidharth Raimedhi is a Fellow at the Council for Strategic and Defense Research (CSDR), a New Delhi-based think tank. He tweets @SidharthRaimed1. Views are personal.
(Edited by Saptak Datta)