India’s Russian oil imports poised to rise in September despite US tariffs

Russian oil exports to India are set to rise in September, dealers said, as New Delhi defies US punitive tariffs designed to force the country to stop the trade and push Moscow towards a peace deal with Ukraine.

India has become the biggest buyer of Russian oil supplies that were displaced by Western sanctions after Moscow invaded Ukraine in 2022. This has allowed Indian refiners to benefit from cheaper crude.

But the purchases have drawn condemnation from the government of US President Donald Trump, which increased US tariffs on Indian imports to 50% on Wednesday.

New Delhi says it is relying on talks to try to resolve Trump’s additional tariffs, but Prime Minister Narendra Modi has also embarked on a tour to develop diplomatic ties elsewhere, including meeting Russian President Vladimir Putin.

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US officials have accused India of profiteering from discounted Russian oil, while Indian officials have accused the West of double standards because the European Union and the US still buy Russian goods worth billions of dollars.

“The tariffs are part of a broader trade discussion between India and the US, and given India’s increasing domestic refinery runs amid discounted Russian barrels, we don’t see India scuppering its Russian imports in meaningful volumes,” BNP Paribas said in a note.

The Indian oil ministry did not respond to a request for comment on Thursday.

Without India, Russia would struggle to maintain exports at existing levels, and that would cut the oil export revenues that finance the Kremlin’s budget and Russia’s continued war in Ukraine.

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Three trading sources involved in oil sales to India said Indian refiners would increase Russian oil purchases in September by 10-20% from August levels, or by 150,000-300,000 barrels per day.

The sources, who cited preliminary purchases data, could not be named because they were not authorised to speak publicly on the issue.

The two biggest buyers of Russian oil for India, Reliance and Nayara Energy, which is majority Russian-owned, did not immediately respond to a request for comment.

Russia has more oil to export next month because planned and unplanned refinery outages have cut its capacity to process crude into fuels. Ukraine has attacked 10 Russian refineries in recent days, taking offline as much as 17% of the country’s refining capacity.

In the first 20 days of August, India imported 1.5 million barrels per day of Russian crude, unchanged from July but slightly below the average of 1.6 million bpd in January-June, according to data from Vortexa analysts.

The volumes are equal to around 1.5% of global supply, making India the largest buyer of seaborne Russian crude, which covers some 40% of India’s oil needs. China and Turkey are also big buyers of Russian oil.

India set to carry on buying?

India’s increased buying of Russian oil over recent years has been to the detriment of more expensive supplies from the Organization of the Petroleum Exporting Countries. OPEC’s share edged up in 2024 after an eight-year drop.

Russian exporters sold Urals crude loading in September at discounts of $2–$3 per barrel to benchmark dated Brent, the three traders said.

The levels are cheaper than discounts of $1.50 per barrel in August, which were the narrowest since 2022, the traders said.

“Unless India issues a clear policy directive or trade economics shift significantly, Russian crude will likely remain a core part of its supply mix,” said Sumit Ritolia from Kpler.

Brokerage CLSA in a note also predicted only “a limited chance of India stopping Russian imports” unless a global ban is imposed.

It also said that if Indian imports of Russian crude were halted, the knock-on impact could be to reduce global supplies by around one million bpd and lead to a short-term spike in global prices to nearly $100 a barrel.

Traders said the full impact of sanctions and tariffs may only be visible in cargoes arriving to India in October, which will begin to trade in the next few days.

In addition to the US tariffs, the European Union has also tightened its price cap designed to limit Russia’s oil revenues, which will complicate sales later this year.

The EU has set the cap at $47.60 per barrel from September 2 - 15% below the Russian crude market price - restricting access to Western services for cargoes sold above the cap.