Big Oil Question After India-US Trade Deal: Does India Stop Buying Russian Crude From Today?

India and the US agreed on a trade deal under which Washington will bring down the reciprocal tariff on Indian goods to 18 per cent from the current 25 per cent and halt the export of Russian oil, US President Donald Trump said on Monday after a phone conversation with Prime Minister Narendra Modi.

Does this mean Indian refiners will stop importing Russian oil from today?

According to the sources of news agency Reuters, Indian refiners will need a wind-down period to complete Russian oil deals before imports from that country can be halted, and they have so far not been ordered by the government to stop such imports.

Indian companies have already booked cargoes loading in February and arriving in March, so a wind-down period would be needed to fulfil existing commitments, Reuters quoted two sources as saying.

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The trade deal with India would slash US tariffs on Indian goods to 18 per cent from 50 per cent in exchange for India lowering trade barriers and stopping its purchases of Russian oil. It would buy oil instead from the US and potentially Venezuela.

India's crude oil import

India became the top buyer of discounted Russian seaborne crude after the 2022 outbreak of war in Ukraine, generating a backlash among Western nations that targeted Russia's energy sector with sanctions.

The United States wants to curb Russia's oil revenues to make it harder for Moscow to fund the war.

"We spoke about many things, including trade, and ending the war with Russia and Ukraine," Trump said of his discussion with PM Modi. "He agreed to stop buying Russian oil, and to buy much more from the United States and, potentially, Venezuela."

What PM Modi said on Russian oil purchase

PM Modi followed with a post on social media that he was delighted with the reduced tariff, but made no mention of a halt to purchases of Russian oil.

India will gradually cut its Russian oil imports, according to the Russian sources, adding that a complete halt would hit operations at Russia-backed Indian refiner Nayara Energy’s 400,000-barrel-per-day refinery.

Nayara relies solely on Russian crude after Iraq's SOMO and Saudi Aramco pulled back amid payment difficulties following European Union sanctions imposed on the refiner in July last year.

As per Reuters source, Nayara's Russian oil imports in April would be negligible as it shuts its refinery for over a month from April 10 for maintenance.

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Reuters last week reported that the United States had told Delhi it could soon resume purchases of Venezuelan oil to help replace imports of Russian oil. Trump said on Saturday that India would buy Venezuelan oil.

What Indian oil minister said

Indian Oil Minister Hardeep Singh Puri said last month India was diversifying its crude sources as its Russian oil imports fell.

Data from trade sources showed India's Russian oil imports fell to their lowest level in two years in December, while OPEC's share of Indian imports rose to an 11-month high.

Indian refiners have been buying more oil from Middle Eastern, African and South American countries as they began scaling back Russian oil purchases, following discussions at a government meeting about accelerating a US-India trade deal, refining sources said last month.

(With inputs from agency)