Trump's threat of punishment leaves India in limbo over Russian oil

India is struggling to strike a balance after US President Donald Trump threatened to impose "penalties" on India for continuing to import Russian oil - a trade that New Delhi is apparently unwilling to end anytime soon. While Mr. Trump told reporters on Friday that he had "heard" that India would stop buying Russian oil, officials in New Delhi have yet to commit.

The reaction of senior Indian officials: insisting on continuing to buy Russian oil

On August 2, 2025, two senior Indian officials, speaking on condition of anonymity, made it clear that the Indian government's policy had not changed and would continue to import oil from Russia. They stressed that the Indian government had "not given any instructions to oil companies" to reduce imports from Russia, and that "these are long-term oil contracts, and purchases cannot be stopped overnight." One official further pointed out that the recent decrease in purchases was not due to Trump's threats, but to economic factors such as lower Russian exports, stable Indian demand, and lower Russian oil discounts.

Randhir Jaiswal, a spokesperson for the Indian Ministry of Foreign Affairs, reiterated at a news conference that India's policy towards Russia would not be shaken by external pressure, and that energy import decisions were "based on the available price of oil on the international market and the global situation at that time." The Times of India quoted government sources as saying that Indian refiners continue to buy Russian crude oil, mainly driven by economic factors such as price and transportation.

In an earlier interview, Hardeep Singh Puri, India's energy minister, defended New Delhi's actions, saying purchases of Russian oil had helped stabilise global prices and were even encouraged by the US. "If countries had stopped buying Russian oil at that time, prices could have gone up to $130 a barrel," he said. "In that case, we were advised by all parties, including our American friends, to buy Russian oil, but within the price cap."

Trump's threats have strained India-US relations

On July 30, 2025, Trump announced a 25% tariff on Indian imports to the United States effective August 1, with unspecified "additional penalties" for India's purchases of Russian oil and military equipment. He complained on social media that India's tariff rates were too high and non-tariff barriers were "onerous and annoying", resulting in small-scale US-India trade. He has also publicly accused India of "stepping on two boats", both purchasing large quantities of Russian oil and weapons and imposing high tariffs on US companies. On July 31, Trump signed an executive order imposing reciprocal tariffs of 10% to 41% on 69 trading partners around the world, of which India faces a 25% tariff.

Trump went further on August 1, saying he had "heard" that India would no longer buy oil from Russia, calling it a "good step", but also saying he "doesn't know if this news is true". However, just hours later, Indian officials directly refuted this claim, saying that India has not changed its procurement policy. The headline of the Times of India report pointed directly to "India will continue to buy Russian oil despite the pressure of US tariffs", highlighting India's tough response to Trump's threat.

On July 14, he publicly threatened to impose punitive tariffs of 100% or even 500% on any country that continued to buy Russian oil if Russia did not reach a peace deal with Ukraine. US Treasury Secretary Basant warned after talks in Stockholm that countries that continued to buy Russian oil could face high "retaliatory tariffs."

Analyst's View: Geopolitics and Economic Game

Bob McNally, president of Rapidan Energy Group, a consulting firm, said India was baffled by Mr. Trump's threats, especially after the relatively lenient attitude toward Indian purchases of Russian oil during the Biden administration. "Now we have a big shift in attitude and are asking, 'What are you trying to do with all this Russian oil?'" He argued that Mr. Trump's tough stance could force India to face a difficult choice: "If Trump decides to risk the entire India-U.S. relationship, it's hard to imagine that India will continue to import 1.50 million barrels of Russian crude." Mr. McNally noted that India needs to balance energy security with American pressure.

Vishnu Varathan, managing director of Mizuho Securities, analyzed that the US threat is a "clear and present danger" for India. He believes that New Delhi is likely to remain uncommitted on the issue of oil purchases to assess the pros and cons of using the "Russia option" as a bargaining chip. Varathan suggested that India could explore other sources of cheap oil, such as Iran (if exempted by the United States) or OPEC + members under pressure from the United States, but replacing Russian oil would bring additional costs. For example, Saudi oil is more expensive to Asian countries due to OPEC's "Asia premium" policy.

Ajay Srivastava, founder of the Global Trade Research Initiative, an Indian think tank, pointed out that Trump's tariffs are not just an economic measure, but also a pressure tactic.GTCforeign exchangeIntended to force India to align geopolitically with the US, he said: "The message is clear: agree with the geopolitical views of the US and sign the deal or face full tariffs - India is being used as a negative lesson for other countries." Mr. Srivastava estimated that Indian exports to the US could fall by 30 per cent in the current fiscal year (to March 2026), from $86.50 billion to $60.60 billion, with petroleum products, pharmaceuticals and electronics hardest hit.

Saran, a former senior Indian official, said that India had been pressured by the United States to reduce Iranian oil imports to zero during Trump's first term, and that it was "pointless" economically. He believes that India may now adopt a "wait and see" strategy to assess whether Trump's threat is only a short-term pressure tool. Saran stressed that given the sensitivity of the domestic economy to oil prices, India must ensure that import sources are diverse and affordable, "in a sense, this is a national security imperative."

Indian officials have made it clear that bilateral relations should not be influenced by third countries, and the Modi government is unhappy with the deterioration of US-India relations and believes that US policy should not be allowed to dictate its energy choices.

Reflecting a strong backlash against Mr. Trump's policies, an Indian journalist posted on social media platform X that India's response to Mr. Trump had been uncompromising, publicly accusing the US of "hypocrisy" over Russian oil and stressing that it would "safeguard national interests and economic security".

Why does India insist on buying Russian oil?

Since the conflict broke out, Russia has become India's largest oil supplier. In 2024, Russian oil will account for 36% -40% of India's total imports, with an average daily import of about 1.75 million to 2 million barrels, much higher than the pre-war less than 100,000 barrels (2.5%). According to the International Energy Agency, 70% of Russia's crude oil exports in 2024 will go to India.

Indian officials argue that low prices and stable supplies of Russian oil are essential for economic growth and that a halt to imports could send oil prices soaring, threatening energy security.

India's energy cooperation with Russia is also underpinned by deep geopolitical ties. During the Cold War, the Soviet Union was a quasi-ally of India, providing a large number of weapons and repeatedly using veto power to support India on the India-Pakistan issue. Indian Foreign Minister S. Jaishankar once called the India-Russia relationship "a constant in world politics." The frequent meetings between Putin and Modi further solidified the two countries' strategic partnership in the energy, military, and nuclear fields. Analysts believe that this deep dependence makes it difficult for the United States to change India's strategic calculus through a single economic lever such as tariffs.

The Complex Game of India-US Relations

Although US-India relations have warmed up in recent years, with Trump and Modi showing close interactions on several occasions, Trump's hard-line policies are upsetting this balance. Opposition parties in India have questioned Modi's foreign policy. Congress Party President Mallikarjun Kharge has criticized Trump's tariffs for harming India's small and medium-sized enterprises and farmers, and questioned Modi's "friendship" with Trump for failing to protect national interests.

Indian Commerce and Industry Minister Piyush Goyal said the Modi government is reviewing the impact of Trump's tariffs and collecting feedback from exporters and industry groups and will take all necessary measures to safeguard the national interest. New Delhi is considering increasing imports of natural gas, communications equipment and gold from the United States to narrow its trade surplus with the United States, but has refused to open its agricultural and dairy markets because farmers are political votes for the Modi government, according to Indian sources familiar with the matter.

The impact of global energy markets

Owing to growing concerns about disruptions to Russian oil supplies, the OPEC + group agreed on August 3 to increase output by 547,000 barrels per day in September to ease market tensions. However, the cost of replacing Russian oil remains high for India. For example, Saudi oil is more expensive due to the "Asia premium" policy, and Trump's sanctions on Venezuela have also made it more difficult for India to find alternative sources.

conclusion

India faces a dilemma under Mr. Trump's threat of tariffs and penalties: long-term energy co-operation and economic interests with Russia on the one hand, and latent risks in its relationship with the US on the other. The tough statements by senior Indian officials and the views of analysts suggest that New Delhi prefers to safeguard energy security and national interests rather than succumb to external pressure. However, Trump's tough policies could further exacerbate tensions in India-US relations, affecting global energy markets and the geopolitical landscape.