After six months of appeasing Moscow without success, the President of the United States, Donald Trump, seems to have decided to use sanctions on Russian oil sales to force Moscow to agree to a ceasefire in Ukraine. However, he has done so by attacking one of the United States’ biggest allies in the world, India, which is also a strategic rival of China, the country that poses the greatest threat to U.S. global supremacy.

Trump stated yesterday that India has “24 hours” (approximately until early afternoon in Spain) to do something, which not only includes buying less oil from Russia but also fewer weapons from that country (presumably implying more from the U.S.). The issue is that he has not specified what he wants Delhi to do. The U.S. President has threatened to substantially raise the tariffs that American importers must pay when buying Indian goods, but has not provided further instructions on what he expects from the government of his ally, Narendra Modi.

Tomorrow, Thursday, the new 25% tariffs unilaterally set by the U.S. President on Indian imports will come into effect, in addition to the potential tariffs on Russian oil if they materialize. And on Friday, the ultimatum given by Trump to Vladimir Putin to agree to a ceasefire in Ukraine expires. Otherwise, he has stated, there will be a wave of sanctions. Given that the U.S. has very limited trade with Russia – which it is reluctant to give up, as it involves strategic minerals – and imports almost nothing from Russia, it is assumed that the sanctions would be “secondary,” affecting countries that do trade with Russia.

Externally, India remains firm and refuses to reduce its purchases of Russian hydrocarbons. Delhi issued a statement yesterday reminding that the EU maintains active trade in raw materials – including oil and gas – with Russia, despite a reduction after the invasion of Ukraine. It also explained that the U.S. continues to buy “uranium hexafluoride for its nuclear industry and palladium for its electric vehicle industry, as well as fertilizers and chemicals” from Vladimir Putin’s regime.

However, actions seem to point in another direction. According to the news agency Reuters, India’s largest refinery company, India Oil Corporation, has drastically increased its purchases of American, Canadian, and Middle Eastern crude oil to be delivered in September, anticipating the suspension of Russian oil arrivals. The company has acquired 7 million barrels, with 73% being American. Other major Indian refineries have also suspended the purchase of Russian oil, and even shipments that have already left Russia may never unload their hydrocarbons. According to ship tracking by the financial information company Bloomberg, last Friday there were at least four Russian tankers detained on the edge of Indian territorial waters, awaiting a decision by Indian authorities.

Indian companies have asked the Modi government for guidance, and it has only advised them to prepare contingency plans to ensure alternative supplies from Middle East, the United States, and West Africa. This change would not only pose a significant logistical challenge but could also have repercussions on global oil markets. If India drastically reduces its purchases from Russia, it would have to compete more aggressively in other regions, potentially driving up prices and destabilizing procurement strategies of other major importers.

India buys around 38% of Russian oil exports leaving that country by sea, supplying about a third of its demand. Moscow sells the oil to India at $55, with a discount of about five dollars per barrel, allowing the Asian country to save around €10 billion annually. China is the largest importer of Russian oil, accounting for 48% of that country’s foreign sales. However, Trump has not threatened Beijing. In fact, the U.S. President has lifted most restrictions on exporting microprocessors and high technology to China and even prohibited the President of Taiwan – a country whose independence Beijing does not recognize – from making a technical stop in New York.

Trump’s sudden sensitivity towards China seems to stem from his desperation for China to accept a trade deal and lift the covert embargo it has imposed on essential raw materials for Western, particularly U.S., weapons. At the moment, Beijing does not seem interested in any agreement with Washington.

All these economic considerations raise questions in India about whether Trump really wants Putin to order his cannons to stop firing at Ukrainians or simply wants India, the third-largest consumer and importer of oil in the world, to stop buying that energy source from Russia and switch to the U.S.

Trump also faces a major economic and political problem with the oil industry in his own country, the world’s largest producer of that hydrocarbon. Tariffs on steel and aluminum have significantly increased the cost of extracting U.S. oil, which is largely obtained through fracking, a controversial technique that makes it about ten times more expensive than oil from, for example, Saudi Arabia.

At the same time, the uncertainty created by the White House with its tariffs is slowing down the U.S. and global economy, with little growth in demand for gasoline and other oil derivatives (except in India). U.S. oil companies were among the biggest financiers of Trump’s campaign, but now find that ‘their’ candidate’s policies indirectly do not favor them, to the extent that U.S. oil production is set to decline this year for the first time in a decade, as it is not profitable to open new wells.

Donald Trump is tightening sanctions loopholes that fund Moscow’s war machine. What does a crackdown on Russia’s oil trade mean for global markets — and economic heavyweights like China and India?

India and China have pushed back against US President Donald Trump’s threats of secondary sanctions — penalties for doing business with a sanctioned country — over their continued purchases of Russia’s oil, which is a key revenue stream for Moscow’s war in Ukraine.

Both nations vowed to protect their energy security and economic sovereignty against what Beijing firmly called “coercion and pressure” from the United States. China became the biggest importer of Russian oil in 2022.

India, meanwhile, accused the West of hypocrisy, pointing out that the European Union continues to import Russian energy, despite having massively reduced its reliance on it since the war began.

New Delhi further noted that Washington had actively supported its oil purchases from Russia, which ramped up shortly after the Russian invasion, to help stabilize global oil prices.

India’s oil purchases from Russia grew nearly 19-fold from 2021 to 2024, from 0.1 to 1.9 million barrels a day, while China’s rose by 50% to 2.4 million barrels a day.

Petras Katinas, a Lithuania-based energy analyst at the Centre for Research on Energy and Clean Air (CREA), told DW that India, Russia’s second-largest oil buyer, had saved up to $33 billion in energy costs between 2022 and 2024 as Moscow offered large price cuts when the US and Europe cut their reliance on Russian oil and gas.

India’s longtime policy of balancing ties with the US, Russia and China, without prioritizing any side, had “underpinned” the decision to buy discounted Russian crude, with New Delhi “prioritizing energy security and affordability,” Katinas said.

Trump’s new sanctions threat roils markets

Having already imposed a 25% tariff on Indian imports, Trump issued an executive order on Wednesday, levying an additional 25% tariff on the same goods over India’s purchases of Russian oil.

Oil prices rose nearly 1% on the news, while Indian media outlets reported that the new levy could spike the country’s oil bill by up to $11 billion. New Delhi labeled the additional levy “unfair, unjustified and unreasonable.”

Trump said the tariffs would take effect in 21 days, giving India and Russia time to negotiate with the administration on the import taxes. The president was also expected to announce wider secondary sanctions on other countries and entities with which Russia trades oil. The White House said that details would come on Friday, without giving further details.

Secondary sanctions would be another major blow for the Russian economy, already reeling from Western sanctions. With military spending now exceeding 6% of GDP and real inflation estimated by some analysts at 15-20% versus the official 9% figure, Russia is burning through cash, putting serious pressure on its budget and arms factories.

For global markets, new sanctions could trigger a seismic shock in energy prices and trade flows reminiscent of 2022, when the oil price surged and Russia bypassed Western sanctions by striking discounted energy deals with two of the world’s largest economies.

“If India had not bought Russian crude [in 2022], it’s anyone’s guess what the oil price would have been — $100 (€86), $120, $300 [per barrel],” Sumit Ritolia, a New Delhi-based oil analyst from trade research house Kpler, told DW. WTI crude hovered between $85 and $92 per barrel in the weeks before the invasion.

Trump’s 25% “secondary tariff” could now leave India with no choice but to scale back at least some of its oil trade with Russia. Any additional sanctions would only make matters worse.

Katinas said secondary sanctions “raise the stakes” significantly, “threatening Indian companies’ access to the US financial system and exposing banks, refineries, and shipping firms to serious repercussions given their integration into global markets.”

Indian refiners process Russian crude into diesel and jet fuel, much of which is then exported to Europe and Asia for profit Image: Biju Boro/AFP

Oil price spike to stoke inflation

If Russia’s five million barrels a day were suddenly removed from the oil market, analysts think oil prices could surge once again, as affected countries scramble to source other supplies. Even with oil cartel OPEC recently increasing output, replacing such a large volume would be exceptionally difficult in the short term, given limited spare capacity and logistical constraints.

“There is nowhere to get those five million [barrels] fast enough to prevent a spike in oil prices.” Alexander Kolyandr, senior fellow at the Center for European Policy Analysis, told the UK’s Independent newspaper.

Ritolia told DW it may take Indian firms up to a year to cut their reliance on Russian oil, if required.

Higher oil prices would trigger a sharp rise in inflation both in the US and worldwide. The US Federal Reserve has estimated that every $10 increase in crude adds about 0.2 percentage points to US inflation. India’s central bank reached a similar conclusion.

If prices were to climb from the current $66 a barrel to $110-$120 per barrel, a roughly one percentage point inflation rise would drive up costs for consumers and businesses — especially in energy, transport, and food.

China spared while India suffers?

Katinas said China, whose total trade with the US is more than four times the size of India’s, “might be exempt” from the new US measures. With the world’s two largest economies conducting over $580 billion of trade, China’s sheer economic scale gives it bargaining power that India lacks.

China’s chokehold on the supply of rare earth minerals — a persistent friction point in US-China relations — may serve as yet another lever Beijing is pulling to temper Trump’s stance.

With India lacking comparable leverage, Trump earlier this week doubled down on New Delhi, saying the likely impact of his new sanctions on Russia and India would “take their dead economies down together.”

India’s economy gained billions in savings from discounted Russian oil imports Image: Arun Sankar/AFP

India’s oil jackpot shrinks

India is, meanwhile, no longer reaping the same windfall from Russian oil as it did in 2022, when discounts ranged from $15 to $20 per barrel. That margin has now narrowed to around $5, according to Kpler’s Ritolia.

Eager to replenish its war chest, Russia is aggressively maximizing energy revenues, buoyed by rising demand from Turkey — now its third-largest oil customer — and across Asia, where Russian crude is discreetly reexported under alternative labels to sidestep US sanctions.

Still, Indian refiners continue to buy. Imports hit an 11-month high in June at 2.08 million barrels per day, accounting for 44% of India’s total crude intake — a sharp rebound driven by geopolitical hedging and price competitiveness.

Beyond the rhetoric, China’s likely response seems guided by its earlier reaction to secondary sanctions. Chinese banks are increasingly refusing Russian transactions, even in yuan, forcing Moscow to rely on opaque intermediaries and third-country workarounds.

Beijing sees oil imports as a priority that is mostly shielded from political pressure, while India is seen as more likely to hedge: trimming purchases if pressured, but not abandoning discounted Russian crude entirely.

Ritolia speculated that India might “reduce” its Russian oil imports, but added: “I don’t see us going down to zero anytime soon.”

Edited by: Ashutosh Pandey

Donald Trump is tightening sanctions loopholes that fund Moscow’s war machine. What does a crackdown on Russia’s oil trade mean for global markets — and economic heavyweights like China and India?

India and China have pushed back firmly against US President Donald Trump’s threats of secondary sanctions — penalties for doing business with a sanctioned country — over their continued purchases of Russia’s oil, which is a key revenue stream for Moscow’s war in Ukraine.

Both nations vowed to protect their energy security and economic sovereignty against what Beijing firmly called “coercion and pressure” from the United States. China became the biggest importer of Russian oil in 2022.

India, meanwhile, accused the West of hypocrisy, pointing out that the European Union continues to import Russian energy, despite having massively reduced its reliance on it since the war began.

New Delhi further noted that Washington had actively supported its oil purchases from Russia, which ramped up shortly after the Russian invasion, to help stabilize global oil prices.

India’s oil purchases from Russia grew nearly 19-fold from 2021 to 2024, from 0.1 to 1.9 million barrels a day, while China’s rose by 50% to 2.4 million barrels a day.

Petras Katinas, a Lithuania-based energy analyst at the Centre for Research on Energy and Clean Air (CREA), told DW that India, Russia’s second-largest oil buyer, had saved up to $33 billion in energy costs between 2022 and 2024 as Moscow offered large price cuts when the US and Europe cut their reliance on Russian oil and gas.

India’s longtime policy of balancing ties with the US, Russia and China, without prioritizing any side, had “underpinned” the decision to buy discounted Russian crude, with New Delhi “prioritizing energy security and affordability,” Katinas said.

Trump’s new sanctions threat roils markets

Having already imposed a25% tariff on Indian imports, Trump issued an executive order on Wednesday, levying an additional 25% tariff on India-made goods over its purchases of Russian oil.

Oil prices rose nearly 1% on the news, while Indian media outlets reported that the new levy could spike the country’s oil bill by up to $11 billion. New Delhi labeled the additional levy “unfair, unjustified and unreasonable.”

Trump said the tariffs would take effect in 21 days, giving India and Russia time to negotiate with the administration on the import taxes. The president was also expected to announce wider secondary sanctions on other countries and entities with which Russia trades oil.

Secondary sanctions would be another major blow for the Russian economy, already reeling from Western sanctions. With military spending now exceeding 6% of GDP and real inflation estimated by some analysts at 15-20% versus the official 9% figure, Russia is burning through cash, putting serious pressure on its budget and arms factories.

For global markets, new sanctions could trigger a seismic shock in energy prices and trade flows reminiscent of 2022, when the oil price surged and Russia bypassed Western sanctions by striking discounted energy deals with two of the world’s largest economies.

“If India had not bought Russian crude [in 2022], it’s anyone’s guess what the oil price would have been — $100 (€86), $120, $300 [per barrel],” Sumit Ritolia, a New Delhi-based oil analyst from trade research house Kpler, told DW. WTI crude hovered between $85 and $92 per barrel in the weeks before the invasion.

Trump’s 25% “secondary tariff” could now leave India with no choice but to scale back at least some of its oil trade with Russia. Any additional sanctions would only make matters worse.

Katinas said secondary sanctions “raise the stakes” significantly, “threatening Indian companies’ access to the US financial system and exposing banks, refineries, and shipping firms to serious repercussions given their integration into global markets.”

Oil price spike to stoke inflation

If Russia’s 5 million barrels a day were suddenly removed from the oil market, analysts think oil prices could surge once again, as affected countries scramble to source other supplies. Even with oil cartel OPEC recently increasing output, replacing such a large volume would be exceptionally difficult in the short term, given limited spare capacity and logistical constraints.

“There is nowhere to get those 5 million [barrels] fast enough to prevent a spike in oil prices.” Alexander Kolyandr, senior fellow at the Center for European Policy Analysis, told the UK’s Independent newspaper.

Ritolia told DW it may take Indian firms up to a year to cut their reliance on Russian oil, if required.

Higher oil prices would trigger a sharp rise in inflation both in the US and worldwide. The US Federal Reserve has estimated that every $10 increase in crude adds about 0.2 percentage points to US inflation. India’s central bank reached a similar conclusion.

If prices were to climb from the current $66 a barrel to $110-$120 per barrel, a roughly 1 percentage point inflation rise would drive up costs for consumers and businesses — especially in energy, transport, and food.

China spared while India suffers?

Katinas said China, whose total trade with the US is more than four times the size of India’s, “might be exempt” from the new US measures. With the world’s two largest economies conducting over $580 billion of trade, China’s sheer economic scale gives it bargaining power that India lacks.

China’s chokehold on the supply of rare earth minerals — a persistent friction point in US-China relations — may serve as yet another lever Beijing is pulling to temper Trump’s stance.

With India lacking comparable leverage, Trump earlier this week doubled down on New Delhi, saying the likely impact of his new sanctions on Russia and India would “take their dead economies down together.”

India’s oil jackpot shrinks

India is, meanwhile, no longer reaping the same windfall from Russian oil as it did in 2022, when discounts ranged from $15 to $20 per barrel. That margin has now narrowed to around $5, according to Kpler’s Ritolia.

Eager to replenish its war chest, Russia is aggressively maximizing energy revenues, buoyed by rising demand from Turkey — now its third-largest oil customer — and across Asia, where Russian crude is discreetly reexported under alternative labels to sidestep US sanctions.

Still, Indian refiners continue to buy. Imports hit an 11-month high in June at 2.08 million barrels per day, accounting for 44% of India’s total crude intake — a sharp rebound driven by geopolitical hedging and price competitiveness.

Beyond the rhetoric, China’s likely response seems guided by its earlier reaction to secondary sanctions. Chinese banks are increasingly refusing Russian transactions, even in yuan, forcing Moscow to rely on opaque intermediaries and third-country workarounds.

Beijing sees oil imports as a priority that is mostly shielded from political pressure, India is seen as more likely to hedge: trimming purchases if pressured, but not abandoning discounted Russian crude entirely.

Ritolia speculated that India might “reduce” its Russian oil imports, but added: “I don’t see us going down to zero anytime soon.”

Technicians stand next to an oil rig which is manufactured by Megha Engineering and Infrastructures Limited (MEIL) at an Oil and Natural Gas Corp (ONGC) plant, during a media tour of the plant in Dhamasna village in the western state of Gujarat, India, August 26, 2021. Amit Dave | Reuters

U.S. President Donald Trump added further pressure to India on Wednesday by bumping up tariffs to 50% — but calls for India to immediately stop buying Russian oil could cause global crude prices to spike, industry sources told CNBC. Trump has accused India of “fueling” Russia’s war machine and said the country is “directly or indirectly importing Russian Federation oil.” As a result, the U.S. imposed an additional 25% tariff on India, bringing total levies against the major U.S. trading partner to 50%. India was once encouraged to buy Russian crude by the United States, and, unlike LNG, Russian crude isn’t sanctioned, but traded under a price cap to limit Moscow’s ability to profit from its sale. India is one of the biggest buyers of Russian oil, according to data from Kpler which shows total Russian crude exports amount to around 3.35 million barrels per day, of which India takes about 1.7 million and China 1.1 million. In New Delhi, there must be “confusion,” Bob McNally, president of Rapidan Energy Group and former White House energy advisor to former President George W. Bush, told CNBC. “Joe Biden went to India after the invasion of Ukraine and begged them to take Russian oil, the Indians hardly imported any Russian oil, and they begged India, ‘please take the oil,’ so that crude prices would remain low, and they did. Now we’re flipping around and saying, ‘why are you taking all this oil,'” McNally added.

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Industry sources in the Indian petroleum sector told CNBC the country has abided by all international sanctions, and that India is doing the global economy a “favor” by buying Russian oil which in turn, stabilizes prices. The sources did not wish to be identified due to the sensitivity of the matter. India has argued that it if it were to stop buying Russian oil, a plan must be put in place to stabilize energy markets, along with a contingency to fill the shortfall in supply if Russian barrels are taken off the market. “In case India decides to cut Russian oil imports, the refineries likely would try to find alternative barrels from the Middle East, as they used to rely on those barrels until 2022. Likely other buyers would not step in,” Giovanni Staunovo, a commodity analyst at UBS told CNBC. Russia is the third largest global crude producer, after the U.S. and Saudi Arabia. Moscow produces nearly 11 million barrels of oil per day, according to the U.S. Energy Information Administration. India’s Russian crude oil imports was 38% in both 2023 and 2024 and is currently 36% in 2025. Total Indian crude imports are increasing each year with rising demand, and as a result, imports of Russian crude in 2025 are their strongest annual pace yet. If this supply was to be removed from the market, prices would skyrocket, according to the industry sources in the Indian petroleum sector. “If India were to stop buying Russian crude oil today, global crude prices could jump to over $200 per barrel for all global consumers,” an industry source told CNBC. “Very near term, there is a risk of a pop in brent prices to $80 or above,” McNally told CNBC, signaling that the impact of additional tariffs and a potential cut to Russian oil imports would be significantly less catastrophic.

“When they didn’t want India to buy something, they told us,” an industry source in the Indian petroleum sector said. This was indeed the case when India was once purchasing Iranian crude, which New Delhi no longer buys and is now sanctioned as Washington doubles down on its maximum pressure campaign against the Islamic Republic. Hardeep Singh Puri, India’s petroleum minister, last month told CNBC’s Dan Murphy: “The price of oil would have gone up to 130 dollars a barrel. That was a situation in which we were advised, including by our friends in the United States, to please buy Russian oil, but within the price cap.” Sara Vakhshouri, the founder and president of SVB Energy International, told CNBC the hefty duties announced by Trump are a “negotiation tactic,” aimed at “reclaiming lost U.S. oil market share in India and oil export declines since 2022, and securing equivalent export of other commodity to India.” “India has always coordinated closely on US oil policy, including sanctions on Iranian oil. At the same time, for the Trump administration, energy security, affordability, and reliability are priorities” Vakhshouri added.

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01:46 (IST) Aug 07

Foreign affairs expert Subhash Goyal has criticised US President Donald Trump’s decision to impose an additional 25 per cent tariff on India over its purchase of Russian oil, warning that the move will damage trade ties and hurt both Indian and American consumers.

“Look, India and Russia have a very old relationship. And Russia is a trusted friend of ours. If we’re importing oil from Russia, the reason for that is that we have to look at our oil security in our agriculture sector and transport sector. And it is not that we are doing it only through Russia, but we are doing it from 10-15 countries. And the European Union is also doing it through Russia in a large number, but all the sanctions are being imposed on India,” Goyal told ANI.

“So, I don’t understand what the strategy is, but this will cause a lot of loss to our exports. Our exports are more than $100 billion, and our exports will be reduced by at least $30-40 billion. And the sectors like electronics or steel, which already account for 50% of our exports, will not be affected so much. Or if they are excluding pharmaceuticals, then it will not be affected so much. But still, our neighbouring countries like Bangladesh, Sri Lanka and Vietnam will be subject to 10% tariffs. Singapore also has a 10% tariff. So, either our exporters will have to route through there. And more than us, the American industry and the American consumers will be more affected,” he added.

Goyal stressed that the US depends significantly on Indian goods and services, including in the technology sector. “Because, look, today there are medicines and other things which a lot of industry depends on Indian goods. Our software industry, all their technology, at this time, 30-50% are of Indian origin. Whether it is Microsoft, Google, Apple, or any big company, they have a lot of software development and manufacturing units in India. So, what will happen with this is that America is pushing India towards Russia and China,” he said.