India contemplating responses under escalating US tariff pressures
India Seeks Alternatives to Russian Oil Amid US Tariff Threats
Relations between India and the United States are being tested more than at any other time over the last 20 years, as the US has given India a three-week ultimatum to end purchases of Russian oil or face painful tariffs. India, however, has shown resilience in the face of these challenges, seeking alternatives to Russian oil and diversifying its supplier base.
India's Prime Minister, Narendra Modi, has warned that the cost of additional US tariffs could make many businesses "not viable". Without a deal, a "needless trade war" would likely ensue, according to Urjit Patel, a former central bank governor. Modi has called Brazilian President Luiz Inacio Lula da Silva, discussing the need to "defend multilateralism".
In response to US secondary sanctions risks and tariffs, Indian refiners are reducing their dependency on Russian crude, which constituted about 35-37% of India’s imports before these measures. The diversification of India's oil import portfolio is a direct response to these challenges.
India's key alternatives to Russian oil include re-engaging with traditional Middle Eastern producers such as Saudi Arabia, the UAE, and Iraq, as well as diversifying sources to countries like the US, Brazil, Canada, and Guyana. Indian state-owned refiners have recently bought large volumes of oil from these alternative sources, signaling a strategic shift away from reliance on discounted Russian crude.
Saudi Aramco is planning shipments of about 22.5 million barrels in September 2025, marking a return to previous levels before the spike in Russian imports. The UAE and Iraq, alongside Saudi Arabia, are being considered to boost supplies as India rebalances its oil import portfolio from Russia.
India has expanded its supplier base from about 27 countries to roughly 40, including these newer or previously less prominent sources, enhancing diversification and supply security. Indian Oil Corp. and Bharat Petroleum Corp are actively purchasing crude on the spot market across global origins to supplement long-term contracts and mitigate disruption risks.
While Russia remains an import source, the discount advantage of Russian oil has narrowed, reducing its appeal. India is balancing commercial interests with geopolitical constraints by widening the range of suppliers and depending more on Gulf crude and other international options.
As the situation develops, Modi might visit China in late August, marking his first visit since 2018, although it has not been confirmed officially. Retired diplomat Akbaruddin suggests that New Delhi can be "smartly flexible", implying potential strategies like buying more US oil if priced competitively, or engaging Russia on the ceasefire issue.
The opposition politicians are watching closely, with Mallikarjun Kharge, president of the key opposition Congress party, stating the government is "disastrously dithering". Buying Russian oil saved India billions of dollars on import costs, and it remains to be seen how India will navigate this complex geopolitical landscape while protecting its economic interests.
[1] Reuters [2] Bloomberg [3] Financial Express [4] Economic Times
- Despite the US tariff threats, India is actively pursuing news about alternative sources of oil, specifically from Middle Eastern countries like Saudi Arabia, the UAE, and Iraq, as well as the US, Brazil, Canada, and Guyana, to diversify its business and reduce dependency on Russian oil.
- The Indian economy is closely watching the ongoing political situation between India and the US, with some researchers expressing opinions that a needless trade war could ensue if a deal is not reached.
- In response to US secondary sanctions risks and tariffs, the culture of relying on discounted Russian crude is gradually shifting in India, with state-owned refiners turning to other international options like those from the energy-rich Middle East and South America.
- The health of India's businesses is at risk due to the potential additional US tariffs, as Prime Minister Narendra Modi has warned that they could make many businesses "not viabile".
- Amidst these geopolitical challenges, India's Prime Minister, Narendra Modi, is reportedly considering a visit to China in late August to discuss matters of general-news importance, such as the need to "defend multilateralism".
