India Faces Threat of 100% US Tariffs Over Continued Russian Oil Purchases

For four years, India has turned Russia's disruption of global oil markets to its advantage. Crude displaced from western markets after the full-scale invasion of Ukraine has flowed instead to Indian refineries, often at attractive discounts, lowering the cost of one of the country's largest imports and giving its refiners an abundant source of supply. That bargain is now becoming a source of geopolitical risk.

The US House of Representatives passed legislation on Wednesday granting President Donald Trump broad powers to impose sanctions on Russia and tariffs of up to 100% on countries that buy Russian oil and gas. The bill now goes to Trump for signature.

India and China are most exposed, as both are major buyers of Russian crude. Between December 2022 and August 2026, China accounted for half of Russia's crude exports, followed by India at 37%, Turkey at 5% and the EU at 5%, according to the Centre for Research on Energy and Clean Air, a think-tank. Russia supplied 30.3% of India's crude imports in fiscal 2026, worth $40.8bn out of a total import bill of $134.7bn, according to the Delhi-based Global Trade Research Initiative. In July, Russian crude accounted for more than half of India's imports. The UAE supplied 10.8%, Saudi Arabia 9.6%, Venezuela 6.3%, Brazil 5.5%, Oman 5.3% and the US 2.9%. Russia alone supplied more crude than all six combined.

Ajay Srivastava, a former Indian trade official who runs GTRI, described the bill as a blunt and dangerous attempt to pressurise India into signing a bilateral trade agreement on one-sided terms. India buys Russian oil to secure affordable energy for 1.4 billion people, he said, not to finance war, and those purchases have helped stabilise global supplies and prices.

The economics of Russian oil have nonetheless shifted. The crude no longer carries the steep discounts that made it particularly attractive to Indian refiners in the early years of the war, competition for Russian barrels has intensified, and shipping, insurance and sanctions risks have risen. Richard Blumenthal, a Democratic senator, told reporters after the vote: "China and India, you better buy your oil and gas somewhere else."

Affected countries would normally have 180 days to cut Russian energy imports or negotiate with Washington, but the president can shorten that deadline. India said in a statement that it was monitoring further developments and remained firmly committed to ensuring energy security for its people. The issue had been discussed at high levels in recent months with various US interlocutors, it added, and its potential implications for both the bilateral relationship and the international energy market had been clearly articulated by the Indian side.

India can find alternatives to Russian crude, but replacing it at scale would come at a price. S&P Global says alternative supplies can mean higher crude, freight and insurance costs, while longer shipping routes add to the burden. Sumit Ritolia, an analyst at the maritime intelligence firm Kpler, says the issue is not simply whether Russian barrels can be redirected to other buyers, but whether enough alternative crude is available to replace them without tightening the global market further.

The tariff would hit India elsewhere, too. Washington is threatening tariffs on Indian exports to America, not a tax on Russian crude entering India. The impact would be felt through Indian exporters, the rupee, refinery margins and the trade balance. Michael Kugelman, a senior fellow at the Atlantic Council, told the BBC the bill could have major problematic impacts for India at the worst possible time, amid sensitive final-stage trade talks and shaky broader relations. India has built some insulation through new trade deals with key markets in the EU and elsewhere, he said, and by bolstering an already strong trade partnership with China. But tariffs of up to 100% from a critical export destination, he added, are bad news no matter how you slice it.

The scale of that exposure is considerable. The US imported about $104bn of goods from India in 2025, while two-way trade in goods and services was roughly $240bn, according to the US Trade Representative. Indian exports to America include electronics, pharmaceuticals, machinery, jewellery, chemicals, textiles and petroleum products. In 2025, electrical and electronic equipment alone accounted for about $25.8bn of those exports, pharmaceuticals about $9.7bn and machinery about $7.2bn. The new threat follows an earlier round of Trump tariffs on Indian goods, which peaked at 50% in 2025 before being reduced.

That creates an uncomfortable calculation for Delhi: how much should India pay for Russian crude before the savings are outweighed by the risk to its exports to the US? There is no simple answer. It will depend on the Russian discount, global crude prices, freight and insurance costs, the tariff Trump ultimately imposes, and whether Washington offers exemptions or reaches a broader settlement with Delhi.

The picture grows more complicated once the crude is refined. India is not merely a buyer: its refineries turn Russian crude into fuels that can then be exported. Ukrainian strikes on Russian refineries have forced the world's once-largest oil-products exporter to import fuel. In August, imports hit a record 172,000 tonnes, more than seven times the previous monthly high, according to CREA. India supplied about 120,000 tonnes, roughly 70%, mostly petrol refined from Russian crude at a refinery in Gujarat and worth around €78m.

China buys more Russian crude than India, but Kugelman says Beijing has greater leverage because of its role in global supply chains and the scale of its economic relationship with the US. China has massive leverage over the global economy, particularly through its dominance of critical supply chains, he says. India, despite being one of the world's biggest economies, does not have the same leverage. The Trump administration appears to believe its economic interests are more exposed if China retaliates than if India does.

For India, the issue is not simply how much Russian oil it buys, but how resilient its alternatives are. The threat is serious because India imports more than 88% of its crude oil. More than 85% comes from just six countries, several in conflict-prone regions, while its refineries are not always equipped to switch easily between crude grades, according to the Council on Energy, Environment and Water. The vulnerability extends beyond oil. India imports more than 60% of its LPG, the main cooking fuel for more than 330 million households. Its strategic petroleum reserves hold only nine to ten days of net oil imports, compared with roughly 200 days in Japan and 207 in South Korea. Operational stocks at refineries provide another 64 days.

All this makes Russian crude more than a bargain. CEEW estimates that India has saved about $12.6bn from its post-2022 shift to Russian crude. The looming US tariff could now turn that insurance into a liability, leaving Delhi to calculate whether the savings from Russian oil are worth the price of keeping it. Srivastava reckons Washington could threaten tariffs of up to 100%, then offer a lower rate if Delhi cuts Russian oil purchases and accepts concessions in a deeply unequal trade deal. India, he says, should not allow US tariff threats to determine its energy policy. It should continue buying Russian oil as long as it remains commercially competitive and negotiate firmly with Washington without granting unilateral trade concessions.