Amid Trump Threats and Narrowing Discounts, Indian Oil Companies Stop Buying Crude Oil from Russia

India’s state-run oil refiners have stopped buying crude from Russia over the last one week, soon after price discounts narrowed and pressure intensified from US President Donald Trump, industry sources said.

According to a Reuters report, Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL), Hindustan Petroleum Corporation (HPCL) and Mangalore Refinery and Petrochemicals Ltd (MRPL) have not placed new orders for Russian crude recently.

Why Russian purchases are on Hold? 

The halt on Russian oil purchases is followed by a drop in discounts on Russian crude to their lowest levels since 2022, thereby undermining the economic case for its continuous imports.

In addition to that, refiners are worried that the European Union’s latest curbs can further complicate overseas transactions and financing, even for buyers who adhere to the price cap mechanism. 

In July, the US President threatened to impose 100 per cent tariffs on countries buying oil from Russia unless Moscow agrees for a comprehensive peace deal with Ukraine.

Meanwhile, as economic and strategic factors align, Indian state-run refiners which mainly buys Russian crude on a delivered basis, are now trying to source alternatives from the spot market. These markets include Middle Eastern grades like Abu Dhabi’s Murban crude and West African supplies.

How Russia Has a Role in India’s energy imports 

In the recent months, India has emerged as the biggest buyer of seaborne Russian crude. Russia accounts for roughly 35 per cent of India’s total crude oil supplies and as the war in Ukraine enters its fourth year, India remains a critical revenue source for Moscow.

Private refiners purchased nearly 60 per cent of India’s average 1.8 million barrels per day (bpd) of Russian oil imports in the first half of 2025, Reuters reported. The state-run refiners, which control over 60 per cent of the country’s 5.2 million bpd refining capacity, procured the remaining. 

Trump imposes 25% tariffs on Indian goods 

On Wednesday, US President Donald Trump has hit the Indian markets by announcing a 25% tariff on all export goods from the country, starting from August 1. The move has hit the critical Indian export sectors, ranging from smartphones, pharmaceuticals, auto parts and engineering goods, jewellery and many more. He also announced an energy partnership with Pakistan to explore and develop the country’s "oil reserves", which he claims are “massive”.

Taking to his social media account on Truth Social, Trump wrote, “…while India is our friend, we have, over the years, done relatively little business with them because their Tariffs are far too high, among the highest in the World, and they have the most strenuous and obnoxious non-monetary Trade Barriers of any Country.”

Further, adding to the pressure, Trump on Monday shortened the deadline for secondary sanctions on buyers of Russian exports to 10–12 days. This reduced timeline will apply if Russia fails to reach a peace agreement with Ukraine.

US sanctions Six Indian Cos for Oil Trade with Iran

On Wednesday, the US State Department sanctioned six Indian companies for allegedly trading in Iranian petroleum and petrochemical products. The move comes as a part of a broader enforcement action that targets 20 entities globally and points out Washington’s crackdown on violations of its sanctions regime against Iran.

Now, these Indian firms now face a freeze on all US-based assets and a prohibition on dealings with American individuals or companies. The sanctions also extend to any subsidiaries in which the designated entities hold 50 per cent or more ownership.