Are U.S. Tariffs Forcing India’s Oil Majors to Halt Russian Crude?

A sudden tariff offensive from Washington has jolted India’s energy sector into crisis mode. State-run oil refiners—Indian Oil Corporation (IOCL), Bharat Petroleum Corporation (BPCL), Hindustan Petroleum Corporation (HPCL), and Mangalore Refinery and Petrochemicals Ltd (MRPL)—have abruptly frozen spot purchases of Russian crude after U.S. President Donald Trump imposed a 25% tariff on Indian exports and warned of penalties over New Delhi’s Moscow oil ties.

The move marks the most severe disruption to India’s crude basket since Western sanctions on Russia in 2022. Together, these four state refiners control over 60% of India’s refining capacity and source nearly 40% of their crude needs through the spot market.

India’s Top Supplier in Jeopardy

India, the world’s third-largest oil importer, has been Russia’s biggest seaborne crude buyer, with Russian barrels making up roughly 35% of India’s total imports this year. But in the past week, not a single state-owned refinery has booked Russian crude. Instead, they’ve pivoted to Abu Dhabi’s Murban and West African grades—costlier options that will squeeze refining margins.

Private Refiners Hold the Line

While state companies retreat, private giants Reliance Industries and Nayara Energy are expected to maintain Russian term supplies under long-standing contracts. Both have built a profitable model around re-exporting refined Russian crude products to Europe, their most lucrative market.

Still, even Reliance has taken the unusual step of locking in Abu Dhabi Murban crude for October loading, signaling that private refiners, too, are bracing for deeper turbulence.

Trump’s Deadline and Shrinking Discounts

The tariff shock comes just weeks after Trump’s July 14 ultimatum: unless Russia reaches a “major peace deal” with Ukraine, any country buying Russian oil faces 100% tariffs. On July 30, he slashed the window for secondary sanctions on buyers from 50 days to barely 10–12, intensifying the fear in India’s oil corridors.

For India, which imports over 85% of its crude needs, the freeze underscores the fragility of its energy security amid great-power rivalry. New Delhi has repeatedly rejected “unilateral sanctions,” but the tariff squeeze is forcing an immediate recalibration.

If the halt persists, analysts warn of ripple effects on domestic fuel prices and a fundamental shift in India’s crude sourcing strategy. 

For now, one thing is clear: the U.S. tariff strike has turned Russian crude—the backbone of India’s oil imports over the past two years—into a political fault line. The coming weeks will test how far India can walk the tightrope between Moscow and Washington without letting its refineries—and its economy—burn.

ALSO READ: US Again Claims Trump Stopped India-Pakistan War