Trump's India pact to make big dent in Russian oil revenue

MOSCOW: Russia faces a steep drop in oil income if U.S. President Donald Trump successfully pressures India to stop importing Russian crude, because losing its top purchaser of seaborne exports would force Moscow to slash prices to find other buyers, analysts and traders said.

Trump on Monday cut U.S. tariffs on Indian goods in a trade deal he said also included provisions for India to halt oil imports from Russia, the world’s second-biggest oil exporter. The United States is putting pressure on Russia to agree a peace deal in Ukraine.

Trump has over the past year already claimed that Indian Prime Minister Narendra Modi agreed to stop buying Russian oil.

India never halted imports, however, citing its need for energy security and for cheap oil. The Kremlin says energy cooperation with India, its second largest oil buyer after China, is strong after Russian President Vladimir Putin visited the country in December 2025.

But Indian refiners are taking a cautious approach to Russian oil purchases, which is already hurting Moscow’s income.

Russian oil imports dropped 22% to 1.38 million barrels per day in December from November, their lowest since January 2023, reducing Russia’s share in Indian imports to 27.4% while OPEC’s share rose to 53.2%, according to Reuters’ calculations.

That follows a peak in India’s Russian oil imports at around 2 million barrels per day in June 2025.
“Any further reduction would already be meaningful, because there is only one relevant alternative buyer – China – which has also its limitations in taking in sanctioned crude,” said David Wech from Vortexa consultancy.

The pressure on Russia is increasing as oil discounts widen and fewer buyers are willing to take the risk, Wech said.

Prices for Russian oil have sunk to record lows, while Russia’s budget shows a deficit due to a shortfall in energy revenues, according to a government official.

Adding to the problems, the number of tankers with Russian oil at anchor has increased as companies struggle to sell oil.

FLOWS TO DROP FURTHER IN APRIL

If India stopped buying Russian oil, Moscow would have to try to re-route it to China at cheaper prices, which would take time, and cut production and exports, said Igor Yushkov, an analyst at Russia’s government-run Financial University.

The European Union is moving ahead with plans to stockpile critical materials.

“Output and export cuts would lead to an oil shortage. Hence we are not seeing a full U.S. ban on Russian oil imports – they would suffer themselves from higher oil prices,” said Yushkov.

Russian oil exports and production have stayed largely resilient in the face of some 30,000 Western sanctions imposed on Moscow over its war in Ukraine since 2014.

Moscow has managed to redirect oil flows away from Europe to China, India and Turkey. Like India, Turkey has also cut purchases in recent months amid tougher Western sanctions.

Russia’s total oil exports stood at 4.91 million bpd in December with China being the largest buyer of 2.3 million bpd of crude, according to the International Energy Agency.

India’s government has given no instructions to refiners to stop buying Russian oil and they would need a wind-down period to complete purchases already in place for March, sources said.

India will cut Russian imports in April when one of its top refiners, Russian-backed Nayara, carries out a one-month maintenance at its 400,000 bpd plant, a trader in Russian oil said.

Volumes beyond April will be decided by Russia-Ukraine peace talks and the Indian government’s broader stance, traders said.

Trump said India could buy more U.S. and Venezuelan oil to replace Russian purchases.

U.S. crude cannot replace Russian oil on a like-for-like basis due to quality differences, while Venezuela’s exports are small, said Alexandra Hermann, Economist at Oxford Economics.

Crude from Saudi Arabia, the UAE and Iraq are more likely candidates to substitute Russian oil, said Yushkov.

But deep discounts may still make Russian crude difficult to resist for Indian buyers, he added.