NEW DELHI – The United States has imposed an additional 25% tariff on Indian imports, bringing the total levy to 50%, following accusations from President Donald Trump that India is “directly or indirectly” supporting Russia’s war effort by continuing to purchase Russian oil.
The White House announcement Wednesday intensified scrutiny on New Delhi’s energy trade practices, even though Russian crude oil is not under formal sanctions. The move, seen by experts as a negotiating tactic, threatens to disrupt trade ties between two long-standing security and economic partners.
According to S&P Global data, India currently imports 1.79 million barrels of Russian crude per day, the country’s strongest annual intake yet. This accounts for over 36% of India’s total crude imports, with the remainder largely sourced from the Middle East.
“If India were to stop buying Russian crude oil today, global crude prices could jump to over $200 per barrel,” a senior source within India’s petroleum sector told CNBC, speaking on condition of anonymity.
Conflicting signals from Washington
India’s reliance on discounted Russian oil increased significantly after 2022, encouraged initially by U.S. officials seeking to stabilize global energy prices following the invasion of Ukraine.
“Joe Biden went to India after the invasion of Ukraine and begged them to take Russian oil... Now we’re flipping around and saying, ‘why are you taking all this oil,’” said Bob McNally, President of Rapidan Energy Group and former White House energy advisor.
Russian oil continues to be traded under a G7-imposed price cap of $60 per barrel, meant to restrict Moscow’s war funding without removing its barrels from the market. India maintains that it abides by all international sanctions, and that it is helping stabilize the global oil market.
“India is doing the global economy a favor by buying Russian oil,” another source in the Indian oil sector told CNBC.
Strategic fallback and U.S. interests
Analysts say Trump’s tariff escalation is aimed at regaining lost U.S. oil market share in India and pressuring New Delhi to reduce reliance on Moscow.
“These hefty duties are a negotiation tactic,” said Dr. Sara Vakhshouri, founder of SVB Energy International. “India has always closely coordinated on U.S. oil policy, including sanctions on Iranian oil. But the Trump administration wants energy security and trade balance.”
India was once a top buyer of Iranian crude, but halted such imports under U.S. sanctions pressure. Similar tactics may now be applied to Russian supplies, but India is resisting without a clear contingency plan.
“If Russian oil is removed, who fills that gap?” asked Giovanni Staunovo, commodity analyst at UBS. “India may turn to the Middle East, but others are unlikely to step in at the same scale.”
Russia, currently the world’s third-largest oil producer, pumps around 11 million barrels daily, according to U.S. Energy Information Administration (EIA) data. India and China remain its top two buyers.
Risk of global price spike
Industry experts warn that a sudden cut in Indian purchases could cause oil prices to surge globally, destabilizing fragile post-pandemic economic recoveries.
“Very near term, there is a risk of a pop in Brent prices to $80 or above,” said McNally. But Indian officials argue the impact would be far more dramatic.
“The price of oil would have gone up to $130 per barrel,” Indian Petroleum Minister Hardeep Singh Puri told CNBC last month. “We were advised, including by our friends in the United States, to buy Russian oil, within the price cap.”
Despite the European Union banning seaborne Russian crude, it still sources 19% of its LNG from Russia, according to Eurostat Q1 2025 data.
Moreover, only select Russian LNG export terminals, such as Arctic LNG 2, are under direct sanctions, indicating the West’s pragmatic approach to energy security.
Diplomatic damage likely
Trump’s decision could strain U.S.-India relations, just months after both sides held defense and economic dialogues. While Indian officials called the tariff hike “unjustified and unreasonable,” they remain firm that oil purchases were done with full transparency and international backing.
“When they didn’t want India to buy something, they told us,” said an Indian energy sector official, referencing India’s earlier compliance with Washington on Iranian oil bans.
OPEC+ producers, including Russia and Saudi Arabia, have recently moved to raise oil output in September, attempting to balance supply concerns.
“If Russian barrels are withdrawn, OPEC+’s spare capacity would be wiped out,” said Staunovo. “The Biden administration knew this when the price cap was implemented.”
Now, Trump’s re-entry into the White House marks a policy reversal, and India could find itself at the center of another geopolitical energy standoff, but this time, with fewer assurances from its Western allies.
