Wanting both? India is importing Russian oil while seeking to reduce tariffs with the United States

India is caught in a subtle geopolitical economic game: on one hand, the country is trying to persuade the United States to lift trade tariffs imposed due to the import of Russian crude oil; on the other hand, despite private refiners retreating due to sanction risks, India's state-owned refiners continue to procure Russian crude oil to meet domestic demand.

According to a report by Xinhua News Agency on August 7, 2025, U.S. President Trump signed an executive order on the 6th, imposing an additional 25% tariff on Indian products exported to the U.S. on the grounds of India's "direct or indirect import of Russian oil." In response, the Indian side stated that the U.S. imposition of tariffs on India is "unfair, unjust, and unreasonable," and India will "take all necessary actions" to safeguard national interests.

Against the backdrop of warnings from the Trump administration about the possibility of imposing more tariffs, Indian state-owned oil companies have not stopped purchasing future deliveries of crude oil from Russia. Analysts cited by the media pointed out that although India's overall imports of Russian oil have recently declined, this is more due to private giants like Reliance Industries cutting back on purchases to avoid sanctions, while the demand from state-owned enterprises remains strong, not only filling some gaps but also expected to slightly increase imports in January.

This strategy places India in a complex position in negotiations with the United States. U.S. Senator Lindsay Graham revealed that Indian Ambassador to the U.S. Vinay Mohan Kwatra has requested him to lobby President Trump to lift the tariffs on India imposed since last year, arguing that India has reduced its procurement of Russian oil. However, Trump stated to reporters on Air Force One on Sunday that if India cannot effectively curb its purchases of Russian oil, the U.S. may further increase tariffs on India.

State-Owned Refiners Maintain Purchasing Power

Despite a decline in India's overall demand for Russian oil in December due to U.S. sanctions on Russian oil companies Lukoil and Rosneft, state-owned refiners (PSUs) remain active.

Muyu Xu, a senior crude oil analyst at tanker tracking company Kpler, pointed out that Indian state-owned enterprises like Indian Oil Corporation (IOC) and Bharat Petroleum Corporation (BPCL) are still purchasing Russian crude oil for future delivery through non-sanctioned suppliers. This behavior effectively partially offsets the market gap left by the exit of private refiners.

Pankaj Srivastava, senior vice president of commodities markets at Rystad Energy, analyzed that despite the overall decline, the intake of Russian oil by state-owned refineries has remained resilient. This highlights that the market has not collapsed but rather undergone a redistribution of demand. Srivastava emphasized that driven by domestic fuel demand and price economics, the trend of public sector refiners processing Russian crude oil has even slightly increased India's Minister of Petroleum Hardeep Singh Puri previously stated to the media that India will source oil from anywhere as long as the terms are favorable.

Withdrawal of Private Refiners Leads to Volume Fluctuations

Market data shows that India's imports of Russian crude oil are indeed declining, but this is mainly due to the hedging behavior of the private sector.

Analysts point out that the decline in Russian oil imports in December is primarily because Reliance Industries, owned by Mukesh Ambani, has reduced its purchases. The company was previously a major importer of Russian oil, but it had begun to significantly cut back on purchases before the U.S. officially sanctioned Lukoil and Rosneft in late November last year.

Data from Kpler indicates that India's imports of Russian crude oil in December decreased by 595,000 barrels per day month-on-month, falling to 1.24 million barrels per day, the lowest level since December 2022. Rystad Energy estimates that since November, India's imports of Russian crude oil have decreased by approximately 300,000 barrels per day month-on-month, to 1.7 million barrels per day.

Currently, India is facing ongoing pressure from the United States. Market forecasts suggest that India's imports of Russian oil may rebound. Rystad Energy expects a "moderate recovery" in India's Russian crude oil imports in January, rising to 1.8 million barrels per day.