MOSCOW (Reuters) – U.S. President Donald Trump’s demand for India to stop Russian oil imports could threaten billions of dollars in Russian revenue, prompting Moscow to retaliate by stopping major oil pipelines led by the United States and could lead to a new global supply crisis.
India is the world’s third largest oil importer and has become the largest buyer of Russian oil since 2022, buying up to 2 million barrels of oil a day, accounting for 2% of global supply. Other top buyers are China and Türkiye.
Analysts at JP Morgan said this week that India’s route is very important to the Kremlin and that if disturbed, it could retaliate by closing the CPC pipeline from Kazakhstan.
Bank of America said: “Russia is not without leverage.”
Trump threatens to impose up to 100% tariffs on countries that buy Russian oil unless Moscow reaches a peace agreement with Ukraine from August 7 to 9. Tariffs on all U.S. goods imported from India will begin on Friday.
Reuters reported on Thursday that Indian state refineries stopped buying Russian oil this week due to Trump’s threat.
Reorganization
India has only started buying large quantities of oil from Russia, the world’s second largest oil exporter since 2022. It became the top importer behind Russia’s former top client, Europe, which banned Russian oil in its military operations in Ukraine. Russia’s oil giant Rosneft owns a major stake in one of India’s largest refineries.
According to the Indian government, India now relies on Russian oil imports at $50.2 billion.
“Shutting off this process will require a large amount of trade flow readjustment,” said Aldo Spanjer of BNP Paribas, adding that global supply has expanded.
According to LSEG data, India purchased all varieties and grades of Russian oil – including Urals from the western ports, ESPO and Sokol from the Pacific, as well as some results from the Arctic.
If India stops buying, Ural will be hit the hardest as it can buy Russia’s largest export rating by quantity. The Indian oil minister said the country could find other supplies.
India will need to increase imports of U.S. and Middle East crude oil or cut refining volumes, resulting in high diesel prices, especially in Europe, importing fuel from India.
“Indian refineries will still work hard to replace the heavy mass of Russian crude oil, so they may end up running,” said Neil Crosby of Spartan Commodity.
Revenue decline
Since 2022, Russia has managed to continue selling oil despite international sanctions.
