Crude import bill may be pushed up after US tariffs

The US tariff may push up India's energy bill if the country is forced to stop importing Russian crude, sending it back to rely heavily on West Asia for crude supplies, industry officials said.

Russia accounted for about 35% of India's crude imports in 2024-25.

A tariff-led disruption could also spike global oil prices, considering Russia accounts for 10% of global crude supply.


India is the world's third-largest oil importing and consuming nation.

Besides a 25% tariff, US President Donald Trump on Wednesday also announced an additional penalty on India for buying oil and arms from Russia.

Before Russia invaded Ukraine, India procured 85% of its crude oil from the Gulf countries and imported only about $5.2-billion worth of Russian oil a year. At the end of 2024, imports from Russia rose nearly 10 times to $56 billion.

"Russian crude oil was cheap for Indian refiners. If we have to go back to importing from the Middle East, the gross refining margin (the difference between crude price and the value of petroleum products made at a refinery) may go down," an industry official said on the condition of anonymity. "Global crude oil prices could also see a spike, pushing India's energy import bill and impacting the economy."

On July 17, oil minister Hardeep Singh Puri had warned that taking Russian supplies off the market could push oil prices to $130-140 per barrel. He also said India would quickly switch to alternative sources to meet its oil demand if any supply were cut off. The world is currently awash in oil, which is helping keep prices in check, Puri said.

In December 2022, the G7 price cap was introduced, which capped the import of Russian oil at $60 a barrel. Indian refiners, however, continued to tank up on Russian oil on the back of handsome discounts. Also, both countries agreed to create mechanisms to resolve payment issues, which aided imports.

"Crude is available in plenty and in recent years, Indian refiners have diversified their crude basket to include oil suppliers from Guyana, Brazil, the US, and Canada, alongside being prepared for a fallback to its original suppliers," an industry official said.

China buys nearly half of Russian crude oil output followed by India, Turkiye and Brazil.