Technicians stand next to an oil rig which is manufactured by Megha Engineering and Infrastructures Limited (MEIL) at an Oil and Natural Gas Corp (ONGC) plant, during a media tour of the plant in Dhamasna village in the western state of Gujarat, India, August 26, 2021.
Amit Dave | Reuters
U.S. President Donald Trump added further pressure to India on Wednesday by bumping up tariffs to 50% — but calls for India to immediately stop buying Russian oil could cause global crude prices to spike, industry sources told CNBC.
Trump has accused India of “fueling” Russia’s war machine and said the country is “directly or indirectly importing Russian Federation oil.” As a result, the U.S. imposed an additional 25% tariff on India, bringing total levies against the major U.S. trading partner to 50%.
India was once encouraged to buy Russian crude by the United States, and, unlike LNG, Russian crude isn’t sanctioned, but traded under a price cap to limit Moscow’s ability to profit from its sale. India is one of the biggest buyers of Russian oil, according to data from Kpler which shows total Russian crude exports amount to around 3.35 million barrels per day, of which India takes about 1.7 million and China 1.1 million.
In New Delhi, there must be “confusion,” Bob McNally, president of Rapidan Energy Group and former White House energy advisor to former President George W. Bush, told CNBC.
“Joe Biden went to India after the invasion of Ukraine and begged them to take Russian oil, the Indians hardly imported any Russian oil, and they begged India, ‘please take the oil,’ so that crude prices would remain low, and they did. Now we’re flipping around and saying, ‘why are you taking all this oil,'” McNally added.
Industry sources in the Indian petroleum sector told CNBC the country has abided by all international sanctions, and that India is doing the global economy a “favor” by buying Russian oil which in turn, stabilizes prices. The sources did not wish to be identified due to the sensitivity of the matter.
India has argued that it if it were to stop buying Russian oil, a plan must be put in place to stabilize energy markets, along with a contingency to fill the shortfall in supply if Russian barrels are taken off the market.
“In case India decides to cut Russian oil imports, the refineries likely would try to find alternative barrels from the Middle East, as they used to rely on those barrels until 2022. Likely other buyers would not step in,” Giovanni Staunovo, a commodity analyst at UBS told CNBC.
Russia is the third largest global crude producer, after the U.S. and Saudi Arabia. Moscow produces nearly 11 million barrels of oil per day, according to the U.S. Energy Information Administration. India’s Russian crude oil imports was 38% in both 2023 and 2024 and is currently 36% in 2025. Total Indian crude imports are increasing each year with rising demand, and as a result, imports of Russian crude in 2025 are their strongest annual pace yet.
If this supply was to be removed from the market, prices would skyrocket, according to the industry sources in the Indian petroleum sector. “If India were to stop buying Russian crude oil today, global crude prices could jump to over $200 per barrel for all global consumers,” an industry source told CNBC.
“Very near term, there is a risk of a pop in brent prices to $80 or above,” McNally told CNBC, signaling that the impact of additional tariffs and a potential cut to Russian oil imports would be significantly less catastrophic.
U-turn
“When they didn’t want India to buy something, they told us,” an industry source in the Indian petroleum sector said. This was indeed the case when India was once purchasing Iranian crude, which New Delhi no longer buys and is now sanctioned as Washington doubles down on its maximum pressure campaign against the Islamic Republic.
Hardeep Singh Puri, India’s petroleum minister, last month told CNBC’s Dan Murphy: “The price of oil would have gone up to 130 dollars a barrel. That was a situation in which we were advised, including by our friends in the United States, to please buy Russian oil, but within the price cap.”
Sara Vakhshouri, the founder and president of SVB Energy International, told CNBC the hefty duties announced by Trump are a “negotiation tactic,” aimed at “reclaiming lost U.S. oil market share in India and oil export declines since 2022, and securing equivalent export of other commodity to India.”
“India has always coordinated closely on US oil policy, including sanctions on Iranian oil. At the same time, for the Trump administration, energy security, affordability, and reliability are priorities” Vakhshouri added.
Russian crude has been placed under a price cap by the European Union since Moscow’s 2022 invasion of Ukraine. That price cap, set at $60 per barrel, allows Russia to export its crude, but at a price lower than the commodity generally trades. The aim is to limit Moscow’s revenue from oil exports, constricting the country’s ability to finance its war in Ukraine. The policy was implemented by G7 nations, hoping to maintain a stable supply of Russian oil on the market.
Sources within the Indian petroleum sector told CNBC “the price cap is a $1 to $2 difference” and insists New Delhi is not buying Russian crude at a major discount per barrel.
Even Russian LNG is not “completely under US secondary sanctions, Europe still buys gas from Russia via pipelines and LNG. Only some Russian LNG export terminals (e.g. Artic LNG 2) are under sanctions, but not all LNG exports,” UBS’ Staunovo, told CNBC.
In 2021, Russia was the largest supplier of petroleum to the European Union. After the bloc’s ban on seaborne imports of Russian crude, the share of imports from Moscow fell from 29% to 2% in the 2025. The EU still imports 19% of its LNG from Russia, according to data from the first quarter of 2025 from Eurostat.
Russia is a member of OPEC plus, established alongside Saudi Arabia in 2016. The group works to stabilize oil prices, adjusting output based on market fundamentals and trends in supply and demand. A group of eight producers just moved days ago to raise output in September, fully unwinding cuts and helping calm fears of Russian supply concerns.
“While OPEC+ countries hold spare capacity to tackle supply disruptions, a full drop in Russian crude production/exports would see that spare capacity completely dwindling. The Biden administration was aware of this,” UBS’ Staunovo said.
The Russian price cap aimed “to reduce the revenues of the Russian government by allowing Russian oil to remain in the markets and to prevent an oil price spike,” Staunovo added, noting that these decisions were made in the run up to a presidential election in the U.S.
Now, after winning that very election, Trump means business. Before slapping an additional 25% tariff on India on Wednesday, he told CNBC that India “hasn’t been a good trading partner.”
It means that U.S. ties with New Delhi, a key security and defense partner, could be at risk. India responded sharply to Trump’s criticism on Wednesday, saying it was “unjustified and unreasonable” and that it bought Russian oil with U.S. support.
