India to restrict Russian oil buy, import only where…

The commitment to halt Russian oil purchases removes the additional 25 per cent punitive tariff earlier imposed, effectively lowering the applied US tariff on Indian exports to 18 per cent from 50 per cent.

Image used only for representation. Photograph: Richard Carson/Reuters

India will restrict crude oil purchases from Russia as part of an agreement reached with the US in exchange for lower trade tariffs, sources said, adding imports will continue for now by refiners such as Nayara Energy, which have no other alternative source.

US President Donald Trump announced overnight that the United States will cut the reciprocal tariff on imports of Indian goods to 18 per cent from 25 per cent under a broader bilateral understanding.

According to him, this came after India agreed to stop buying Russian oil, reduce its tariff and non-tariff barriers against the US, and commit to purchasing an additional $500 billion worth of US energy, technology, agricultural products, coal and other goods over time.

The commitment to halt Russian oil purchases removes the additional 25 per cent punitive tariff earlier imposed, effectively lowering the applied US tariff on Indian exports to 18 per cent from 50 per cent, providing substantial relief to Indian exporters.

What steps will Indian refiners take

Indian refiners, which became the world’s second biggest buyer of Russian oil after it became available at a discount post Moscow’s invasion of Ukraine in February 2022, will continue to honour the purchase commitments made prior to the announcement but will not place new orders thereafter, three sources with knowledge of the matter said.

While refiners like Hindustan Petroleum Corporation Ltd (HPCL), Mangalore Refinery and Petrochemicals Ltd (MRPL) and HPCL-Mittal Energy Ltd (HMEL) had stopped buying oil from Russia soon after the US last year slapped sanctions on Moscow’s key exporters, others like Indian Oil Corporation (IOC) and Bharat Petroleum Corporation Ltd (BPCL) will wind down their purchases, they said.

Reliance Industries Ltd, India’s biggest buyer, which late last year paused purchases after US sanctions on Rosneft and Lukoil, is also likely to cease purchases after its resumption cargo of 100,000-150,000 barrels is delivered.

The only exception to this rule is likely to be Nayara Energy.

Only exception is likely to be Nayara Energy

Nayara was first sanctioned by the European Union and then by the UK for its Russian links (Rosneft holds 49.13 per cent in Nayara).

Because of these sanctions, no other major supplier is willing to do any commercial transaction with the company, resulting in it being forced to buy Russian oil from non-sanctioned entities.

Nayara, sources said, is likely to continue purchases of Russian oil from non-sanctioned entities in the near future.

The refinery’s unique position was explained to US trade officials during talks in December, they said, adding Nayara may have to be given an exemption from the ‘no-Russian oil-buy’ policy or a special dispensation be created.

President Trump announced that India’s “reciprocal tariffs” will be set at 18 per cent instead of 25 per cent (effective immediately), which is marginally lower than the 19 per cent placed on most ASEAN economies (except Singapore) and 20 per cent on Bangladesh.

What about the extra 25% tariff related to Russian oil

The extra 25 per cent tariff related to Russian oil will also be removed, as India has reportedly agreed to stop buying Russian oil.

India has also agreed to import $500 billion worth of US goods (energy, agriculture, technology, etc.), over a five-year period.

In 2025, India exported $92 billion worth of goods to the US (20 per cent of total exports) and imported $50 billion worth of US goods (7 per cent of total imports).

It imported $180 billion worth of oil, of which about 30-35 per cent came from Russia (versus 20-30 per cent from Iraq, 15 per cent from Saudi Arabia, 10 per cent from the UAE and 5-10 per cent from the US).

Sources said India’s oil imports from Russia have been on the decline since the US sanctions on Rosneft and Lukoil came into effect.

In December 2025, they averaged 1.2 million barrels per day, down from a peak of $2.1-2.2 million barrels. In January, they further came down to $1 million barrels and expectation was that they may decline to less than $1 million this or the next month.

With the new understanding with the US, the imports may halve soon.

According to Sumit Ritolia, Lead Research Analyst, Refining and Modeling at Kpler, the India-US trade deal announced is unlikely to result in a near-term reduction in India’s Russian crude imports.

“Russian volumes remain largely locked in for the next 8-10 weeks and continue to be economically critical for India’s complex refining system, supported by deep discounts on Urals relative to Brent.

“Imports are expected to stay broadly stable in the 1.1-1.3 million barrels a day range through Q1 and early Q2,” he said.

“Despite a recent moderation in purchases, India is unlikely to fully disengage in the near term.”

Prashant Vasisht of Icra said the US-India trade deal reportedly includes India to step up purchase of US crude oil and potentially start buying oil from Venezuela.

“For the Indian refining sector, there are ample avenues including the US, to purchase crude as Russian crude accounted for less than 2 per cent of Indian crude imports prior to FY2023.

The discounts on Russian crude oil were marginal prior to the US announcing sanctions on some Russian crude suppliers in October 2025, and ICRA estimates that replacement of Russian crude with market-priced crude would lead to an increase in the import bill of the country by less than 2 per cent.

Additionally, Venezuelan crudes are heavy and sour and therefore cheaper and would be of interest to Indian refiners, many of whom can process these types of crudes, he added.