Trump’s threats force India to look for an alternative to Russian oil
1 April 2025 12:58
Indian oil refiners are urgently looking for alternative oil supplies after US President Donald Trump’ s statement about the possibility of additional sanctions against Russia. These statements have raised concerns about potential disruptions in energy supplies, "Komersant Ukrainian" reports citing Bloomberg.
Thus, Indian state-owned corporations Bharat Petroleum Corp. (BPCL) and Hindustan Petroleum Corp. (HPCL) have stepped up purchases of oil for delivery in May, considering options for supply from the Middle East, North Sea and Mediterranean, traders familiar with the situation said. These tenders were submitted outside of the normal procurement cycle, as supplies for the next month are usually agreed upon in early March.
India has become one of the largest buyers of Russian oil since the start of Russia’s full-scale invasion of Ukraine. It has significantly reduced its oil imports from the Middle East and Africa, instead increasing purchases of cheap Russian crude. Last year, Russian crudes such as Urals accounted for about 40% of the country’s total imports. Indian refineries have been making significant profits thanks to cheaper oil from Russia, but this advantage is gradually diminishing.
China has also increased its imports of Russian oil, as well as oil from Iran and Venezuela, using complex supply chains. The new sanctions and restrictions are slowing down these shipments, but not stopping them completely.
On Sunday, Trump announced the possibility of imposing so-called secondary sanctions against Russian oil buyers if Russian President Vladimir Putin does not agree to end the war in Ukraine. This led to an increase in oil prices: on Monday, futures for WTI crude oil jumped by 3.1%, the largest one-day gain in almost 11 weeks.
“The main question is whether such shocks will lead to a structural reduction in India’s demand for Russian oil I have my doubts, because so far the economic benefits remain. This is a bluff, a tactical move on Trump’s part. But refiners must be prepared for any scenario and cannot rely on intuition alone, even if the threat to supply seems unlikely,”
– said Vandana Hari, founder of Vanda Insights, a Singapore-based consultancy.
The fact that Indian companies are urgently looking for alternative suppliers indicates fears that they may not receive previously contracted shipments of Russian oil. According to traders who wished to remain anonymous, this raises concerns about the stability of supplies.
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Dependence on Russian oil
The United States is India’s largest trading partner, so if secondary sanctions are imposed, the country will likely be forced to look for alternative sources of oil, said Warren Patterson, head of commodity strategy at ING Groep NV in Singapore.
“Traditional sanctions have already created considerable uncertainty. The introduction of secondary sanctions only adds to this uncertainty as it is a new tool. Buyers will have to decide what is more important to them: access to cheap oil or potential economic risks due to additional sanctions,”
– he said.
India and Russia
India is one of the countries that benefit most from not joining the anti-Russian sanctions. Over the years of the full-scale war in Ukraine, it has overtaken China to become the largest buyer of Russian oil. The amount of oil that India buys from Russia has increased from statistically insignificant levels in the 2021-2022 fiscal year to more than 1.5 million barrels per day in 2023-2024, which is one third of all oil purchased by the country.
India also cooperates with Russia in military-technical terms.
Nevertheless, in 2024, the first-ever visit of the head of the Indian government to Ukraine took place.
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