For nearly four years, India — one of the world’s largest net oil importers — has capitalized on the upheaval Russia’s invasion of Ukraine triggered in global energy markets. After Western nations cut most purchases of Russian crude following the 2022 full-scale invasion, vast volumes of discounted Russian oil redirected away from Atlantic markets to South Asia, flooding Indian refineries with a low-cost, abundant supply. This arrangement drastically cut India’s total import bill, keeping domestic fuel prices stable and boosting margins for the country’s refining sector. Today, that once-lucrative bargain has emerged as a major source of geopolitical risk.
On Wednesday, the U.S. House of Representatives approved new legislation that grants President Donald Trump sweeping authority to impose additional sanctions on Russia and levy tariffs as high as 100% on imports from any country that continues purchasing Russian oil and natural gas. The bill now heads to Trump’s desk to be signed into law. Among nations vulnerable to the new measures, India and China stand at the top of the list, as both have become the largest buyers of Russian crude in recent years.
Analysis from the Centre for Research on Energy and Clean Air (CREA), an independent energy think tank, shows that between December 2022 and August 2026, China absorbed 50% of Russia’s total crude exports, while India took 37%, with Turkey and the European Union each accounting for 5%. Data from the Delhi-based Global Trade Research Initiative (GTRI) puts Russia’s share of India’s total crude imports at 30.3% for the 2026 fiscal year, worth $40.8 billion of India’s total $134.7 billion crude import bill. As of July 2026, that share rose to more than 50% — exceeding the combined volume supplied by India’s next six largest providers: the UAE (10.8%), Saudi Arabia (9.6%), Venezuela (6.3%), Brazil (5.5%), Oman (5.3%), and the United States (2.9%).
Ajay Srivastava, a former Indian trade official who leads GTRI, framed the new U.S. legislation as a heavy-handed tactic to force India into accepting a lopsided bilateral trade agreement. “India buys Russian oil to secure affordable energy for 1.4 billion people, not to finance war, and these purchases have helped stabilise global supplies and prices,” he explained. While the economic appeal of Russian crude has softened in recent months — steep early-war discounts have largely disappeared, competition for shipments has grown, and costs for shipping, insurance and risk mitigation have risen — the supply remains an important pillar of India’s energy security.
Democratic Senator Richard Blumenthal made clear the target of the new law shortly after its passage, telling reporters: “China and India, you better buy your oil and gas somewhere else.” Under the terms of the bill, affected nations typically have 180 days to phase out Russian energy imports or negotiate a compromise with Washington, but the president holds authority to shorten that window dramatically. In an official statement, India confirmed it is “monitoring further developments on this matter” and reaffirmed its “firmly commitment to ensuring energy security” for its population. Officials added that the issue has been raised at the highest levels of diplomacy with U.S. counterparts, and New Delhi has clearly communicated the potential fallout for both bilateral ties and global energy markets.
While India could technically replace Russian crude with supplies from other producers, scaling that shift would carry a steep economic cost. Analysis from S&P Global notes that alternative supplies would come with higher per-barrel costs, increased freight and insurance premiums, and longer shipping routes that add further expense. Crucially, the proposed tariffs would not only apply to Russian crude entering India: they would hit Indian exports bound for the U.S. market directly, rippling through Indian exporters, the value of the rupee, domestic refinery margins, and India’s overall trade balance.
Michael Kugelman, senior fellow at the Atlantic Council, told the BBC that the new bill could bring significant disruptive impacts at the worst possible moment, as the two nations navigate sensitive final-stage trade talks and already strained broader relations. “India has built some insulation to fend off the shocks of US tariffs through new trade deals with key markets in the EU and elsewhere, and through bolstering an already strong trade partnership with China. But [up to]100% tariffs from a critical export destination is real bad news, no matter how you slice it and even with successful hedging tactics,” Kugelman explained.
The scale of India’s exposure to U.S. tariffs is substantial. According to the Office of the U.S. Trade Representative, the U.S. imported $104 billion worth of goods from India in 2025, and total two-way trade in goods and services hit roughly $240 billion. India’s top exports to the U.S. include electronics, pharmaceuticals, industrial machinery, jewelry, chemicals, textiles, and refined petroleum products. In 2025, electrical and electronic goods alone made up $25.8 billion of Indian exports to the U.S., followed by pharmaceuticals at $9.7 billion and machinery at $7.2 billion. This new tariff threat comes on the heels of earlier Trump administration tariffs on Indian goods that peaked at 50% in 2025 before being partially rolled back.
The new landscape leaves New Delhi with a difficult calculus: how much economic benefit does Russia oil still provide, and when do the risks to its critical U.S. export market outweigh those savings? There is no straightforward answer, as the outcome will depend on multiple shifting variables: the size of any remaining Russian crude discount, global benchmark prices, logistics costs, the final tariff level Trump approves, and whether Washington grants exemptions to India or negotiates a broader compromise.
The situation grows more complex when accounting for India’s role as a refiner, not just an importer. After a series of Ukrainian drone strikes damaged Russian domestic refineries, Russia — once the world’s largest exporter of refined petroleum products — has become a net importer of fuel. CREA data shows Russian fuel imports hit a record 172,000 tonnes in August 2026, more than seven times the previous monthly high. Of that volume, India supplied roughly 120,000 tonnes — about 70% — most of which was petrol refined from Russian crude at a Gujarat refinery, totaling approximately €78 million in value.
While China purchases more Russian crude than India, Kugelman notes Beijing holds far more economic leverage in its relationship with Washington, due to its central role in global supply chains and the sheer scale of bilateral trade. “China has massive leverage over the global economy, particularly through its dominance of critical supply chains. India, despite being one of the world’s biggest economies, does not have the same leverage. The Trump administration appears to believe that its economic interests are more exposed if China retaliates than if India does,” he explained.
For India, the core challenge extends beyond just adjusting import volumes: it depends on how resilient alternative supply sources truly are. India relies on imports for more than 88% of its total crude demand, according to the Council on Energy, Environment and Water (CEEW), an Indian energy think tank. More than 85% of India’s crude comes from just six countries, many located in geopolitically unstable regions, and most domestic refineries lack the infrastructure to quickly switch between different grades of crude. This vulnerability is not limited to crude: India imports more than 60% of its LPG, the primary cooking fuel for more than 330 million Indian households. Its strategic petroleum reserves only cover 9 to 10 days of net imports, far less than Japan’s roughly 200 days and South Korea’s 207 days, though refinery operational stocks add an additional 64 days of coverage.
Since shifting purchases toward Russia after 2022, CEEW estimates India has saved roughly $12.6 billion on crude imports, turning discounted Russian oil into a key buffer for domestic energy security. Now, the looming U.S. tariff threat risks turning that buffer into a major liability, forcing New Delhi to weigh the savings from continued Russian oil purchases against the economic costs of U.S. tariffs.
GTRI’s Srivastava projects that Washington will use the tariff threat as a negotiating tool: threatening the full 100% levy, then offering to lower rates in exchange for Indian cuts to Russian oil purchases and concessions in the bilateral trade deal. “India should not allow US tariff threats to determine its energy policy,” he said. “It should continue buying Russian oil as long as it remains commercially competitive and negotiate firmly with Washington without granting unilateral trade concessions.”