The downturn comes after the United States imposed an additional 25% tariff on Indian exports in August, a move President Donald Trump linked to India’s continued purchase of discounted Russian crude. Officials say the new duty has sharply eroded the economic benefit Indian refiners once enjoyed from cheaper Russian barrels.
Sanctions have compounded the problem. Washington’s restrictions on Russian energy giants Rosneft and Lukoilsuppliers of nearly 60% of Moscow’s oil to India have disrupted financial transactions and halted several cargoes. Indian banks, wary of penalties, have slowed or stopped payments, prompting Russian firms to delay or suspend deliveries.
The price gap that attracted India to Russian crude after the Ukraine war has also narrowed. Discounts that once ranged between $20 and $25 per barrel have fallen to as low as $1.5 to $2, while global prices have dropped to nearly half their 2022 peak. With shipping and insurance costs higher for Russian routes, refiners have begun favouring traditional suppliers such as Saudi Arabia, the UAE, and the United States.
Europe’s new sanctions present another challenge. From January 2026, the EU will stop buying petroleum products refined from Russian crude, closing a lucrative re-export channel that India used to sell diesel, jet fuel, and petrol to Europe.
Payment hurdles have further strained trade. Russia’s refusal to accept rupees which have accumulated in large volumes due to a lopsided trade balance and increased scrutiny of dollar transactions have slowed settlements and delayed shipments.
Officials say India will continue balancing economic and strategic considerations, but the era of cheap Russian oil appears to be fading.
.jpg)
