The United States has lifted a 25% tariff imposed against India over its continued purchase of Russian oil — citing recent efforts to seek alternative sources. The development came even as President Donald Trump announced an ‘interim’ trade deal with the other country. The POTUS had held talks with Prime Minister Narendra Modi earlier this week and claimed the latter had “agreed to stop buying Russian oil”.
“India has committed to stop directly or indirectly importing Russian Federation oil, has represented that it will purchase United States energy products from the United States, and has recently committed to a framework with the United States to expand defense cooperation over the next 10 years. After considering the information, I have determined that India has taken significant steps to address the national emergency…” read an excerpt from the Executive Order signed on Saturday.
The tariff suspension comes with several caveats — including warnings against a rekindling of trade links with Moscow. A section of the executive order added that US official would “monitor” India to check whether it “resumed directly or indirectly importing Russian Federation oil” in the future. Trump warned that such a scenario would trigger “additional action” and a possible reimposition of the 25% tariff.
Has India stopped importing Russian oil?
India has not officially endorsed this claim — insisting repeatedly that its core strategy was to “ensure the energy security” of more than 1.4 billion citizens. Top officials have hailed the announcement of an ‘interim’ trade deal and widely shared the joint statement. But the executive order released almost simultaneously is yet to find an official response.
The Ministry of External Affairs had insisted on February 5 that its focus remained on diversification and affordability. The MEA clarification came several days after Trump announced the trade deal via social media. The POTUS added that Modi had agreed to stop buying russian oil and promised “to buy much more from the United States and, potentially, Venezuela” during this call.
“Diversifying our energy sourcing in keeping with objective market conditions and evolving international dynamics is at the core of our strategy to ensure this. All of India’s decisions were taken and will be taken with this in mind…Consistent with our approach to energy security, India remains open to exploring the commercial merits of any crude supply, including from Venezuela,” MEA Spokesperson Randhir Jaiswal reiterated during a briefing on Thursday evening.
India begins buying Venezuelan oil
Multiple reports have suggested this week that New Delhi is gearing up for a sharp increase in US oil imports — in line with the Trump claims. Prime Minister Narendra Modi also spoke with acting Venezuelan President Delcy Rodriguez last week and agreed to “further deepen and expand our bilateral partnership in all areas”.
According to a Reuters report on Thursday, Reliance Industries has just purchased two million barrels of Venezuelan oil. This was its purchase from the South American nation in nearly a year. The company reportedly bought Venezuelan crude for April delivery at a discount of around $6.5 to $7 per barrel to ICE Brent. Trading houses Vitol and Trafigura were granted US licenses to market and sell millions of barrels of Venezuelan oil following the US military operation last month to capture former President Nicolas Maduro.
According to a recent SBI report, India can save almost $3 billion by replacing a portion of its Russian supplies with Venezuelan heavy crude and updating its import strategy. The report indicated that a discount of $10 to $12 per barrel on Venezuelan oil could make the switch commercially viable for domestic importers. Data cited by SBI Research said Venezuelan heavy crude was presently priced around $51 per barrel. But experts remain wary over difficulties in refining oil from the South American nation — flagging its somewhat unique properties, bottom-heavy nature, high viscosity and elevated acid number.
Can India actually stop buying Russian oil?
The Executive Order signed by Trump makes no mention of definitive numbers — only noting that India had “committed to stop” direct or indirect imports. According to S&P Global Energy, India cut Russian crude imports by nearly 70% month-on-month in January to about 436,000 barrels per day, while increasing purchases from the Middle East, West Africa and the United States. But an overnight cessation remains impossible for the country.
But source-based reports indicate that Indian oil companies would need some time to wrap up existing contracts before they could stop buying oil from Russia. According to reports, the government is yet to issue any instructions asking refiners to halt these imports.
An agreement would also be impossible for at least one major refiner (Nayara Energy) to follow. The company counts Russian national oil company Rosneft as a significant shareholder and is almost entirely dependent on crude oil from Moscow. It was sanctioned by the United States as well as European Union last year and now remains unable to source oil from most other countries.
“India’s Russian crude imports are unlikely to see a near-term decline. Volumes remain largely locked in for the next 8–10 weeks and continue to be economically critical for India’s complex refining system, supported by deep discounts on (Russia’s flagship crude grade) Urals relative to ICE Brent (a benchmark). Imports are expected to remain broadly stable in the 1.1–1.3 million bpd range through Q1 (January-March) and early Q2 (April-June),” Indian Express quoted Sumit Ritolia — the Lead Research Analyst for Refining and Modeling at Kpler — as saying.