Replacing Russian crude near impossible for Indian refiners as US sanctions bill threatens 100% tariff, say executives

Replacing Russian crude, which has accounted for 47% of India’s imports since the Iran war began, will be difficult for local refiners in the current market, with many key suppliers already cut off, industry executives said in the light of recent legislation passed by the US Congress.

The legislation empowers President Donald Trump to impose tariffs of up to 100% on India, China and other buyers of Russian oil. This doesn’t necessarily mean Trump will immediately impose the penalties. US ambassador to India Sergio Gor had said on August 22 at The Economic Times World Leaders Forum that the legislation wasn’t being pushed by Trump.

Also read: Russian oil uncertainty hangs over India’s largest buyers


“The bill is being pushed by the Congress in a very bipartisan way. This is not something that you have seen the White House advocate for,” Gor said. “And, I think, that’s important to understand as people here say, you know, President Trump is pushing this. You won’t find a clip of (him) pushing it.”

Stark Choice

Indian refiners have been seeking barrels from far and wide. But the bulk of their imports over the past six months has still come from the world’s large producers. Russia, Saudi Arabia and the UAE accounted for two-thirds of India’s crude imports during March-August. Saudi supplies, which made up about 9% of India’s imports, were disrupted by drone attacks on a crucial pipeline last week.

If India and other buyers were to scramble for replacement barrels at the same time, oil prices could rise sharply, executives said. Brent futures are currently around $105 a barrel. Finding vessels could also be a major challenge amid recordhigh tanker freight rates, they said.

India faced a similar choice when the US imposed a 25% tariff on Russian oil purchases in August 2025. But the choice is starker now: Gulf supplies, which were normal then, have been disrupted since the West Asia conflict began at the end of February.

India chose to bear the cost of the tariff rather than cut Russian imports. Imports rose for three months after the duty was imposed, peaking at 1.8 million barrels a day in November 2025. They began falling in December as USIndia discussions on removing the tariff took shape, reaching 1 million barrels a day by February, when it was finally lifted.

Also read: India must not let energy security become a US trade ‘weapon’, warns GTRI

The US said India had agreed to halt Russian crude purchases as the reason for lifting the tariff. India, however, never publicly accepted that it had made such a commitment. Some industry executives are of the view that Trump may not rush to impose the new tariff.

Further disruption to the oil market could push up fuel prices ahead of the US midterm elections and add to inflationary pressures. Diesel prices are already at a record high and the Federal Reserve raised interest rates Wednesday to tame inflation.

The global crude market has become more fragile in recent days with Saudi supplies grinding to a halt and the US blockade of Iranian exports having further slashed available barrels. Any further curtailment of Russian supplies, especially when global inventories are already depleted, could put significant upward pressure on oil prices.