India’s state-owned refiners have abruptly halted all Russian oil purchases, buckling under U.S. pressure after President Trump threatened 100% tariffs on countries buying Russian crude unless Moscow agrees to a Ukraine peace deal. Indian Oil Corp (IOC), Hindustan Petroleum, Bharat Petroleum, and Mangalore Refinery, controlling 60% of India’s refining capacity stopped placing orders this week, scrambling to secure costlier Middle Eastern and West African alternatives like Abu Dhabi’s Murban crude. This panicked shift exposes India’s strategic vulnerability after years of touting "strategic autonomy" while relying on discounted Russian oil, which surged from 0.2% to 35–40% of imports since 2022.
The retreat follows Trump’s 25% tariff on all Indian goods and a separate penalty targeting Russian energy deals, which he announced while mocking, "They can take their dead economies down together". Refiners now face collapsing margins: Russian discounts have narrowed to 2022 lows due to reduced supply, forcing them into spot markets where prices are $8–12/barrel higher. Share prices of state refiners plummeted up to 4.1%, reflecting investor alarm over this self-inflicted crisis. Ironically, India had defied Western sanctions for years, calling them "unilateral," yet now kowtows to U.S. ultimatums within weeks.
While state refiners retreat, private giants Reliance Industries and Rosneft-backed Nayara Energy continue importing Russian oil through annual contracts, accounting for 60% of India’s 1.8 million-barrel daily imports. This schism highlights the Modi government’s incoherence: it publicly orders "contingency plans for non-Russian crude" while allowing corporate allies to prop up Moscow’s war economy. Reliance’s unusual purchase of Murban crude for October delivery signals dwindling confidence in state policy.
India’s hasty surrender isolates it globally. The EU’s pending ban on Indian diesel refined from Russian oil, explicitly naming Nayara will further cripple exports. Meanwhile, Trump’s deadline for a Ukraine deal expires August 8, risking total cutoff of Russian flows. With China absorbing discounted Russian barrels India abandoned, New Delhi squanders leverage as "world’s third-largest oil importer" to appease a capricious U.S. administration. As energy veteran R. Ramachandran warned, realigning supply chains could take six months, leaving 1.4 billion Indians hostage to volatile markets.