India Halts Russian Oil Imports After US Trade Deal
James RileyA US-India trade deal mandates India cease Russian oil purchases, shifting to US crude and disrupting global energy markets.
A new trade deal announced by U.S. President Donald Trump is causing immediate reverberations in global energy markets, prompting Indian refiners to seek urgent clarification from their government and, in some cases, halt purchases of Russian crude oil.
Sources familiar with the situation reported that at least three Indian refiners have requested official guidance on how to handle Russian oil purchases. Two of those refiners have already placed a temporary stop on procuring crude from Russia.
What the US-India Agreement Entails
President Trump revealed the agreement on Monday, outlining a deal structured around a significant shift in India's energy sourcing. The core terms involve the U.S. reducing tariffs on Indian imports. In return, New Delhi has committed to:
• Cease purchasing crude oil from Russia.
• Increase its purchases of American oil and other commodities.
The deal also reportedly offers Indian energy companies access to crude from Venezuela and potentially Iran, providing alternative supply lines to replace Russian oil.
A Major Reversal in Energy Trade
This development marks a dramatic turning point for India, the world's third-largest importer of crude oil. Following Russia's invasion of Ukraine in early 2022, India rapidly increased its intake of discounted Russian crude.
For nearly four years, this strategic shift made Russia the single largest oil supplier to India, accounting for approximately one-third of the nation's total crude imports.
However, Indian refiners had already begun scaling back on Russian oil even before this new deal. Recent U.S. sanctions targeting Russian energy giants Rosneft and Lukoil led Indian companies to halt imports from those specific entities. Refiners pivoted to non-sanctioned Russian supply and sought alternative cargoes from the Middle East, the Americas, and West Africa when arbitrage was favorable. The new trade agreement is set to accelerate this downward trend in supply from Russia.
Global Market Disruption on the Horizon
The sudden nature of the trade deal has injected significant uncertainty into the market. Moody's issued a warning that an immediate and complete suspension of Russian crude imports by India would trigger a major disruption for global oil markets. The full impact now depends on how quickly and strictly the terms of the new agreement are implemented.
