One of the highlights from Trump’s India-US trade deal announcement was his claim that the Modi-led government has agreed to stop the purchase of Russian oil.
After the war began in Ukraine in 2022, India emerged as the largest buyer of discounted Russian oil shipped by sea. This drew criticism from Western countries, which imposed sanctions on Russia’s energy sector to limit its earnings. The United States has since said that it wants to reduce Russia’s oil revenue to make it harder for Moscow to fund the war.
Trump then revealed that he discussed trade issues and the Russia-Ukraine war with Prime Minister Narendra Modi, and claimed that Modi agreed to stop buying Russian oil and increase purchases from the US and potentially Venezuela. But is it going to be that easy for the Indian oil refiners?
Modi later posted on social media welcoming the tariff reduction, but did not mention any decision to stop importing Russian oil.
Why Indian oil firms can’t stop Russian imports overnight
Two sources in the refining sector have told Reuters that the Indian oil companies will need some time to wrap up existing contracts before they can stop buying oil from Russia. They added that the government has not yet issued any instructions asking refiners to halt these imports.
The sources, who spoke on the condition of anonymity, further revealed that the Indian companies have already booked oil cargoes that will be loaded in February and reach India in March. Because of these existing contracts, companies will need some time to complete their commitments before any changes can be made. The sources asked not to be named as they are not authorised to speak to the media.
What happens to Nayara Energy, Russia-backed Indian refiner?
Another source told Reuters India would gradually reduce its Russian oil imports, warning that a complete stop would affect operations at Nayara Energy, a Russia-backed Indian refiner that runs a 400,000-barrel-per-day refinery. Nayara depends entirely on Russian crude after suppliers from Iraq and Saudi Arabia reduced supplies due to payment problems following European Union sanctions imposed on the company last July.
The source added that Nayara’s Russian oil imports in April would be very low, as the refinery is scheduled to shut down for maintenance for more than a month starting April 10.
Will the Indian oil refineries suffer?
Last week, Reuters reported that the United States had told India it could soon restart buying oil from Venezuela to help replace Russian supplies. Trump later said India would purchase Venezuelan oil.
It is important to note here that Oil Minister Hardeep Singh Puri had said last month that India is diversifying its oil sources as imports from Russia decline.
Even the trade data showed that India’s Russian oil imports fell to their lowest level in two years in December, while the share of oil imported from OPEC countries rose to its highest level in 11 months.
Refining companies’ sources said that the Indian oil companies have been increasing purchases from the Middle East, Africa and South America as they slowly cut back on Russian oil. This shift followed discussions at a government meeting on speeding up a US-India trade deal.
Replacing Russian oil would raise India’s import bill by less than 2%, says ICRA
There are some experts who say that India’s oil refining industry can handle a move away from Russian crude under the proposed US–India trade deal without a major rise in costs.
Prashant Vasisht, Senior Vice President and Co-Group Head for Corporate Ratings at ICRA Ltd, explained to Fortune India that Indian refiners have many alternative sources to buy crude, including the US, and noted that before FY2023, Russian oil made up less than 2% of India’s total crude imports.
He added that before the US imposed sanctions on some Russian oil suppliers in October 2025, the price discounts on Russian crude were already small. ICRA estimates that replacing Russian oil with crude bought at global market prices would raise India’s overall oil import bill by less than 2%. He also said Venezuelan crude, which is heavy and sour, is generally cheaper and suitable for many Indian refineries that are equipped to process such grades.