New U.S. Sanctions Law Threatens India’s Huge Russian Oil Trade
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President Trump signed legislation allowing tariffs of up to 100% on major importers of Russian oil and gas. India, the world's second-largest buyer of Russian crude, faces potential trade penalties that could jeopardize ongoing bilateral trade negotiations with Washington.
India’s imports of cheaper Russian crude oil have come under scrutiny in recent days after U.S. lawmakers passed a new sanctions bill against Russia’s energy sector.
The “Lindsey O. Graham Sanctioning Russia and Iran Act of 2026,” which authorizes and expands statutory sanctions, tariffs, and prohibitions on Russia and extends existing sanctions on Iran, was signed into law by U.S. President Donald Trump on Friday.
The law allows the President to potentially impose trade tariffs of up to 100% on countries that are large importers of Russian oil and natural gas.
The President could “increase the rate of duty up to 100% ad valorem (i.e., relative to the value) on all goods imported into the United States from a country that was among the five largest importers of Russian-origin crude oil or natural gas if such country knowingly makes new purchases of such products after enactment of the bill.”
India is the second-largest importer of Russian crude oil, behind China, while imports from Russia have accounted for nearly half of all Indian crude purchases in recent months.
As one of the biggest buyers of Russian crude oil, India could face tariffs of up to 100% on its goods exported to the United States. Moreover, the potential tariffs could sour trade relations just as New Delhi and Washington have been negotiating a bilateral trade deal for months. Related: Hormuz Blockage Puts Qatar's $83 Billion LNG Bet at Risk
Last month, India’s imports of Russian crude oil eased slightly from the record-high in July, as Ukrainian attacks on Russian export infrastructure and competition from China for Russia’s barrels dented India's intake of Moscow’s oil.
India’s imports of Russian oil hit a new all-time high in July and accounted for more than half of total Indian crude oil imports. India’s crude oil imports from Russia rose to 2.8 million barrels per day (bpd) in July, up from the previous high of 2.7 million bpd in June, for the highest average monthly volume ever, according to vessel-tracking data by Kpler.
Going forward, India’s purchases from Russia are set to stabilize at a level of just above 2 million bpd, Sumit Ritolia, Manager Modelling Refinery and Oil Markets at energy flows analytics firm Kpler, told Bloomberg at the end of August.
But as of last Friday, President Trump has the authority to impose tariffs on India if it keeps buying large volumes of Russian oil, potentially complicating the Russian oil trade for New Delhi.
India responded to the U.S. bill, saying it would continue to prioritize its energy security.
“As stated on several earlier occasions, India remains firmly committed to ensuring energy security for its 1.4 billion people. It will continue to do so through diversified sourcing and on the basis of evolving market dynamics,” India’s Foreign Ministry said.
India noted that it has discussed the issue at high level with various U.S. officials and expressed concerns about the implications of potential tariffs because of Russian oil purchases “for not just the bilateral relationship but also the international energy market.”
India has also made clear “its determination to take all necessary measures to protect its trade and economic interests. Government will work closely with Indian trade and industry bodies to deal with the implications of these developments,” the ministry added.
India’s current dilemma is whether it would need to drastically cut its imports of Russian oil and pay higher prices for alternative supply that would hurt both refiners and consumers, ahead of elections in a few months in several states run by the ruling party of Prime Minister Narendra Modi.
A delay in the implementation of potential U.S. tariffs or only slight tariffs could be manageable for India, but the possibility of tariffs, now authorized by Congress by law, could damage the months-long efforts to secure a U.S.-India trade deal.
“From the perspective of the trade talks, this new legislation couldn't have come at a worse time,” Michael Kugelman, a senior fellow at the Atlantic Council in Washington, told Reuters last week.
By Tsvetana Paraskova for Oilprice.com
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The “Lindsey O. Graham Sanctioning Russia and Iran Act of 2026,” which authorizes and expands statutory sanctions, tariffs, and prohibitions on Russia and extends existing sanctions on Iran, was signed into law by U.S. President Donald Trump on Friday.
The law allows the President to potentially impose trade tariffs of up to 100% on countries that are large importers of Russian oil and natural gas.
The President could “increase the rate of duty up to 100% ad valorem (i.e., relative to the value) on all goods imported into the United States from a country that was among the five largest importers of Russian-origin crude oil or natural gas if such country knowingly makes new purchases of such products after enactment of the bill.”
India is the second-largest importer of Russian crude oil, behind China, while imports from Russia have accounted for nearly half of all Indian crude purchases in recent months.
As one of the biggest buyers of Russian crude oil, India could face tariffs of up to 100% on its goods exported to the United States. Moreover, the potential tariffs could sour trade relations just as New Delhi and Washington have been negotiating a bilateral trade deal for months. Related: Hormuz Blockage Puts Qatar's $83 Billion LNG Bet at Risk
Last month, India’s imports of Russian crude oil eased slightly from the record-high in July, as Ukrainian attacks on Russian export infrastructure and competition from China for Russia’s barrels dented India's intake of Moscow’s oil.
India’s imports of Russian oil hit a new all-time high in July and accounted for more than half of total Indian crude oil imports. India’s crude oil imports from Russia rose to 2.8 million barrels per day (bpd) in July, up from the previous high of 2.7 million bpd in June, for the highest average monthly volume ever, according to vessel-tracking data by Kpler.
Going forward, India’s purchases from Russia are set to stabilize at a level of just above 2 million bpd, Sumit Ritolia, Manager Modelling Refinery and Oil Markets at energy flows analytics firm Kpler, told Bloomberg at the end of August.
But as of last Friday, President Trump has the authority to impose tariffs on India if it keeps buying large volumes of Russian oil, potentially complicating the Russian oil trade for New Delhi.
India responded to the U.S. bill, saying it would continue to prioritize its energy security.
“As stated on several earlier occasions, India remains firmly committed to ensuring energy security for its 1.4 billion people. It will continue to do so through diversified sourcing and on the basis of evolving market dynamics,” India’s Foreign Ministry said.
India noted that it has discussed the issue at high level with various U.S. officials and expressed concerns about the implications of potential tariffs because of Russian oil purchases “for not just the bilateral relationship but also the international energy market.”
India has also made clear “its determination to take all necessary measures to protect its trade and economic interests. Government will work closely with Indian trade and industry bodies to deal with the implications of these developments,” the ministry added.
India’s current dilemma is whether it would need to drastically cut its imports of Russian oil and pay higher prices for alternative supply that would hurt both refiners and consumers, ahead of elections in a few months in several states run by the ruling party of Prime Minister Narendra Modi.
A delay in the implementation of potential U.S. tariffs or only slight tariffs could be manageable for India, but the possibility of tariffs, now authorized by Congress by law, could damage the months-long efforts to secure a U.S.-India trade deal.
“From the perspective of the trade talks, this new legislation couldn't have come at a worse time,” Michael Kugelman, a senior fellow at the Atlantic Council in Washington, told Reuters last week.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com
Europe’s Fuel Crisis Spreads From Diesel to Jet Fuel
Saudi Arabia Reroutes Oil Exports as Houthi Strikes Target Yanbu
Hungary Asks U.S. to Waive Tariffs Over Russian Oil Purchases
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