Image/Indian Oil Corp.

India’s state refineries halted Russian oil purchases as U.S. tariff threats and shrinking discounts pressured Moscow, marking a major shift in global energy trade dynamics.

As trade negotiations between New Delhi and Washington intensify, Reuters reported Thursday that India’s state-run refineries have halted purchases of Russian oil over the past week.

Sources said Russia has cut discounts on its oil, while U.S. President Donald Trump has warned India and other nations against buying crude from Moscow.

India, the world’s third-largest oil importer, is also the biggest buyer of seaborne Russian crude — a lifeline for Moscow’s revenue in the fourth year of its war in Ukraine.

Reuters reported that all four state-owned Indian refineries refrained from placing new orders for Russian oil last week, reflecting growing caution over pricing and sanctions pressure.

Trump recently warned oil buyers they could face 100 percent tariffs if Moscow fails to make peace with Ukraine, while Russia continues heavy air and drone strikes.

Sources added that shrinking discounts — at their lowest since Western sanctions began in 2022 — have made Russian oil less attractive, while looming EU sanctions threaten refinery investments.

India, on the verge of a landmark trade deal with the world’s largest economy, appears ready to sacrifice cheaper Russian crude to safeguard broader economic and diplomatic interests.

After US President Donald Trump imposed a 25% tariff on Indian imports and called the Indian and Russian economies as “dead”, reports emerged that New Delhi has asked its refineries to stop purchasing crude oil from Russia, the main source of petroleum for the country. India is one of the largest importers of seaborne Russian crude and an important country for Moscow for revenue generation amid its ongoing war with Ukraine.

MEA responds to claims

In a report published by news agency Reuters, it was said that Indian state refiners have stopped buying Russian crude in the last week as discounts narrowed and Trump warned countries against buying oil from Moscow.

In response to the report, the Ministry of External Affairs on Friday (August 1) said “India buys oil depending on market and global situation”. It however did not elaborate on the issue.

While a Times of India report quoting a senior govt official said no such instructions have been given to oil companies.

Trump criticises India

In a post on Truth Social, Trump also criticised India’s continued trade with Russia and its participation in the BRICS alliance.

“I don’t care what India does with Russia. They can take their dead economies down together, for all I care. We have done very little business with India, their tariffs are too high, among the highest in the world. Likewise, Russia and the USA do almost no business together,” Trump said in the post after announcing the levies on India.

At least four tankers carrying Russian crude are idling off India’s western coast as mounting sanctions and warnings of steep U.S. tariffs disrupt oil flows, the Indian business outlet NDTV Profit reported.

Two of the vessels, the Achilles and the Elyte, are anchored near the port of Jamnagar, which were both originally scheduled to arrive at the nearby Sikka terminal between Wednesday and Thursday.

The ships were loaded with Urals-grade crude at Russia’s key export hubs of Primorsk and Ust-Luga, and both are subject to sanctions imposed by the European Union and Britain.

Two additional tankers, the Destan and the Horae, are also waiting offshore. While the Destan is under similar EU and U.K. sanctions, the Horae is not currently sanctioned.

Indian state-owned refineries suspended Russian oil purchases last week amid threats of tariffs from U.S. President Donald Trump and narrowing price discounts, Reuters reported on July 30, citing its sources.

The news coincides with Trump’s announcement of a 25% tariff on India starting on Aug. 1 as he rebuked New Delhi for its purchases of Russian energy and arms amid the war in Ukraine.

India, long dependent on Middle Eastern oil, sharply increased imports from Russia after Moscow launched its 2022 full-scale invasion of Ukraine, taking advantage of deep discounts and falling European demand.

The South Asian country remains one of the leading buyers of Russian oil, second only to China.

State-owned refiners, including Indian Oil, Hindustan Petroleum, and Bharat Petroleum, have not purchased Russian oil over the past week, four sources familiar with procurement plans told Reuters.

The companies, which typically buy Russian crude on a delivered basis, have turned to spot markets to replace lost volumes, sourcing mainly Middle Eastern grades like Abu Dhabi’s Murban and West African crude, the sources said.

While private refiners such as Reliance Industries and Nayara Energy are India’s largest buyers of Russian oil, state-owned companies account for over 60% of the country’s total refining capacity of 5.2 million barrels per day.

Earlier, Trump threatened to impose a 100% tariff on countries that continued purchasing Russian crude oil.

Upon taking office, Trump imposed short-lived “Liberation Day” tariffs in April, which he withdrew for 90 days due to market and economic concerns.

The U.S. has now imposed various deadlines to reach deals with its many trading partners before tariffs may be reintroduced.

At least four oil tankers carrying Russian crude are idling off India’s western coast as Indian refiners reconsider purchases under sanction pressure from the United States and the European Union, Bloomberg reported on August 1.

The idling tankers highlight the growing uncertainty surrounding India’s future buying of Russian oil, which account for more than a third of the country’s total crude imports.

State-owned companies, including Indian Oil, Hindustan Petroleum, and Bharat Petroleum, have not purchased Russian crude in the past week, according to four Reuters sources familiar with procurement plans.

Two of the vessels — the Achilles and Elyte — are anchored near Jamnagar, having missed their expected arrival at the port of Sikka on July 30-31, according to ship-tracking data. Both ships loaded Ural-grade crude from Russia’s Primorsk and Ust-Luga ports in late June and are sanctioned by the EU and U.K.

The other two tankers, the Destan and Horae, are also anchored off India with Russian oil onboard. Destan, which is also sanctioned, was reportedly due at Sikka on July 24-25, while Horae, which is not under sanctions, is expected to dock at Vadinar on Aug. 1. All four vessels are capable of transporting about 700,000 barrels each.

Earlier, U.S. President Donald Trump announced a 25% tariff on Indian goods effective Aug. 1, citing New Delhi’s continued purchases of Russian oil and weapons as a reason for the move.

The administration also warned of further penalties unless India reduces its energy ties with Moscow.

India has reportedly asked domestic refiners to prepare alternative sourcing strategies, with state refiners turning to spot markets and other crude, from the Middle East and West Africa.

While private refiners like Reliance and Nayara Energy remain major importers of Russian oil, India’s state-run companies account for more than 60% of the country’s refining capacity, which is around 5.2 million barrels per day.

India, once heavily reliant on Middle Eastern supplies, ramped up Russian oil imports after Moscow launched its full-scale invasion of Ukraine in 2022. Taking advantage of deep discounts and reduced demand from Europe, India became the second-largest buyer of Russian crude after China.

On July 14, amid the announcement of a 50-day deadline for Russia to stop its war against Ukraine (later brought forward to Aug. 8) Trump threatened a 100% tariff on countries continuing to import Russian oil.