India Defies Trump's Threats, Continues Russian Oil Imports: Energy Security vs. Geopolitics

India Continues Russian Oil Imports Amidst US Threats

Indian officials stated last Saturday that the country would continue purchasing affordable Russian oil, defying threats of penalties from former US President Donald Trump. This firm stance from Narendra Modi's government reflects a growing unease regarding the once-lauded but now rapidly deteriorating US-India relations. There is a growing sentiment in India that its leaders should not allow increasingly volatile US policies to dictate critical energy supply choices for the nation's 1.4 billion people.

Trump's Unspecified Penalties

Last week, Trump stated that in addition to the existing 25% tariff, unspecified penalties would be imposed on India if it continued to purchase Russian oil. On Friday, he appeared to allude to reports of recent declines in the amount of Russian oil arriving in India. "I hear India is not buying oil from Russia anymore," he told reporters. "That's what I hear, I don't know if that's true. That's a good move, we'll see what happens."

No Change in Indian Policy

However, two senior Indian officials confirmed last Saturday that there has been no change in policy. One official stated that the government has "not issued any instructions to oil companies to restrict" oil imports from Russia. At a press briefing the previous day, Indian Ministry of External Affairs spokesperson Randhir Jaiswal did not directly respond to Trump's threats but suggested that the policy toward Russia would remain unchanged. "Our bilateral relations with countries are based on our own merit and should not be viewed from a third country perspective," Jaiswal said. "India and Russia have a stable and time-tested partnership."

Reasons Behind Trump's Focus on Indian Oil Imports

Trump did not specify what penalties India would face if it refused to halt Russian oil purchases. Some officials and analysts suggest that Trump's focus on Indian oil imports may reflect his dissatisfaction with Russia's lack of progress in resolving the Russia-Ukraine conflict, or it could be a tactic as the US and India attempt to finalize early-stage trade agreement negotiations. Analysts and officials in New Delhi suggest that if the aim is to pressure Russia, its effectiveness is doubtful, as two other major importers of Russian oil are not facing similar penalties. One official noted that such supply agreements involve long-term contracts and logistical arrangements that are difficult to sever overnight, particularly as Trump himself is skeptical of the measures taken against Russia and prone to changing his mind.

Significant Increase in Russian Oil Imports

India has significantly increased its purchases of Russian oil since the onset of the Russia-Ukraine conflict. Russia now accounts for over a third of India's oil imports, whereas this figure was less than 1% before the war. India imports approximately 2 million barrels of crude oil per day from Russia, making it the second-largest importer of Russian oil after China.

Easing International Pressure

In the early months of the Russia-Ukraine conflict, India faced immense pressure to reduce its economic ties with Russia. This pressure persisted as Indian oil imports surged. But by the second year of the conflict, the tone regarding India's oil imports by the world's most populous nation began to shift. India appears to have convinced its American and European allies that it is purchasing cheap Russian oil at the price cap set by the European Union and the G7, which helps to curb global oil prices.

A Pragmatic US Stance

Earlier last year, a senior US Treasury Department official stated during a visit to New Delhi that India's approach aligns with an effective scheme: allowing Russian oil to continue flowing into global supplies, but at a price low enough to reduce Russia's revenues. "They're buying Russian oil because we want someone to buy Russian oil at the price cap, and that's not a violation," then-US Ambassador to New Delhi Eric Garcetti said last year. "That's actually part of the policy design – we don't want oil prices to spike, and they've done that."

Slight Dip in Imports in July

Analysts at Kpler, who track commodity and shipping data, noted that they observed a decline in India's imports of Russian crude oil in July. But they cautioned that this coincides with a period when India typically reduces its oil purchases – due to the monsoon season and scheduled refinery maintenance. The analysts said that this decline was "more pronounced in state-owned refineries," potentially reflecting increased sensitivity to the new EU sanctions on Russian oil and Trump's threats.

India's Dilemma

For the Indian government, choosing between opposing the United States and abandoning Russian oil is not easy. India relies on imports to meet nearly 90% of its energy needs. Although officials say they have diversified oil import sources (purchasing from approximately 40 countries), their supply is often affected by US actions against some major exporting countries. In the past, the US has successfully pressured India to abandon purchasing oil from Iran and Venezuela.

Economic and National Security Considerations

Saran, a former senior official, stated that India reduced its oil imports from Iran to zero during Trump's first term due to pressure from the US. He said that India wants to maintain a positive relationship with the US, even if stopping oil purchases from Iran "made no economic sense for us." Replacing Russian oil with new sources would also incur additional costs. For example, closer sources such as Saudi Arabia sell oil to Asian countries at higher prices due to OPEC's "Asian Premium" policy. Similarly, a senior Indian official stated that India incurred significant losses in its oil investments in Venezuela when Trump imposed sanctions on Venezuela, which the Biden administration later relaxed – before reimposing them again. Saran said that the choices for Indian policymakers are not so easy this time, and they may "wait and see" if Trump's threats are just a short-term pressure tactic. "Given the domestic economy's sensitivity to oil prices, you have to ensure that you not only diversify import sources but also buy the cheapest oil," he said. "In a sense, this is a national security imperative."