The recent escalation in US trade measures against India, an additional 25% tariff on Indian goods announced by President Donald Trump, has stirred diplomatic ripples, but it hasn’t shaken the oil procurement strategies of India’s public sector refiners. Top executives insist that decisions on Russian crude imports remain anchored in economics, not politics.
Credits: The Indian Express
Tariffs, Politics, and Oil: The Current Crossroads
Earlier this month, President Trump announced fresh 25% tariffs on Indian goods, on top of existing duties, citing India’s continued imports of Russian crude as a key irritant. The move came amid protracted trade negotiations between New Delhi and Washington and Trump’s renewed push to end the Ukraine war within days.
However, Indian officials have pushed back, calling the targeting “unjustified and unreasonable.” New Delhi maintains that Russian oil purchases surged only after traditional suppliers in West Asia diverted volumes to Europe, with the US itself having encouraged Indian refiners to buy from Moscow to maintain global market stability.
Refiners Keep Calm and Carry On
For India’s largest refiner, Indian Oil Corporation (IOC), nothing has changed on the ground.
“We have not received any instruction or indication from the government. It’s purely a commercial exercise,” said Arvinder Singh Sahney, IOC chairman. “We buy crude based on economic considerations. No special effort is being made to either increase or decrease Russian imports.”
This sentiment is echoed by Hindustan Petroleum Corporation Ltd. (HPCL) chief Vikas Kaushal. “It’s not that we are not buying Russian crude; those decisions are still open. Whatever is economical will be bought,” he said.
Economics, Not Geopolitics, Driving the Dip
Recent weeks have seen a slowdown in Russian oil arrivals, sparking speculation of political signalling to Washington. But refiners insist the main reason is narrowing discounts.
In IOC’s case, Russian crude accounted for 24% of imports in April–June 2024, down from 30% a year earlier. Sahney attributed the decline to a contraction in discounts, noting that purchases will fluctuate depending on price gaps—rising if discounts deepen, falling if they shrink.
For Bharat Petroleum Corporation Ltd. (BPCL), Russian oil still makes up a hefty 30–35% of its basket. “Our Q1 procurement from Russia was around 34%. It has reduced slightly as discounts fell to just $1.5 per barrel,” said Vetsa Ramakrishna Gupta, BPCL’s finance director. The lost volumes were replaced with shipments from West Africa, Latin America, and the US.
No Sanctions, Just a Price Cap
Indian refiners remain on firm legal ground. Russian crude is not under outright sanctions; instead, the US and its allies have imposed a price cap—applicable only if Western shipping or insurance is used.
“Even today, there is no sanction on Russian crude. As long as we honour the price cap, there’s no violation,” Sahney stressed.
From Fringe Supplier to Mainstay
The Russia–India oil relationship is a relatively new phenomenon. Before the Ukraine invasion in February 2022, Russian crude accounted for less than 2% of India’s imports. But when the West shunned Moscow’s oil, deep discounts made it irresistible for price-conscious refiners. Within months, Russia displaced West Asia as India’s top supplier, now accounting for 35–40% of total imports by volume.
Ironically, this shift once had tacit US approval. Former Biden administration officials have admitted that Washington saw India’s purchases as a stabilising factor in global energy markets.
Credits: Deccan Herald
The Road Ahead
For now, Indian refiners see no reason to alter course. The focus remains on securing the best deal for the country’s energy needs. As Gupta of BPCL put it, “As long as there are no new sanctions, our procurement strategy will keep Russian crude at 30–35%.”
If discounts widen, Russia could regain some lost market share; if not, other suppliers will fill the gap. Either way, commercial logic—not political coercion—is steering India’s crude oil imports. In the tug-of-war between Washington’s geopolitical goals and New Delhi’s energy pragmatism, India’s refiners are making it clear—they’ll follow the money.
