Russia Oil Squeeze: Trump Proposes 100% Tariff Threat – Implications for Companies

US President Donald Trump has issued a stark warning of potential 100% secondary tariffs on countries trading with Russia, raising concerns about the impact on India’s crude oil supply. Currently, India and China are the largest buyers of Russian oil, which has become increasingly significant for India as it relies on imports for over 85% of its crude oil needs. The looming tariffs could disrupt this supply chain, prompting questions about India’s energy security and its response to the evolving geopolitical landscape.

India’s Crude Oil Imports From Russia: Key Developments

Historically, the Middle East has been the primary source of crude oil for India. However, since Russia’s invasion of Ukraine in February 2022, the dynamics have shifted dramatically. Western nations largely boycotted Russian oil, leading Russia to offer steep discounts to attract new buyers. This strategy has allowed India to capitalize on lower prices, transforming Russia from a minor supplier into its leading source of crude oil, surpassing traditional suppliers from West Asia.

Recent data from the Centre for Research on Energy and Clean Air (CERA) indicates that in June 2025, India accounted for 38% of Russia’s crude exports, a significant increase from just 2.1% in FY22. The value of Russian oil imports by India skyrocketed from $2.26 billion in FY22 to an astonishing $50.29 billion in FY25. Furthermore, India’s imports reached 2.08 million barrels per day in June 2025, marking a notable increase despite an overall decline in global crude imports. This shift underscores India’s growing reliance on Russian oil amidst changing geopolitical circumstances.

Potential Impact of US Sanctions on India

The proposed secondary tariffs by the US could fundamentally alter the attractiveness of Russian crude oil for India. If implemented, these tariffs would impose a 100% tax on goods entering the US from countries trading with Russia, effectively nullifying the benefits of discounted oil prices. Reports suggest that the discounts on Russian crude have already begun to diminish, further complicating India’s position.

The ramifications of these sanctions could extend beyond oil imports, affecting all merchandise exports from India to the US. Industry experts warn that Indian refiners may need to revert to traditional suppliers in West Asia or seek alternative sources like Brazil, which could be more expensive. The government has already initiated discussions with West Asian nations to secure oil supplies through alternative routes, especially in light of recent geopolitical tensions in the region.

India’s Strategic Response and Resilience

Despite the looming threat of sanctions, Indian officials maintain a sense of confidence regarding the country’s energy security. Gaurav Moda, a partner at EY-Parthenon India, emphasizes that India’s diversified crude oil procurement strategy has positioned it well to withstand potential supply shocks. Over the past few years, India has expanded its oil supply sources beyond OPEC nations, built strategic reserves, and increased domestic storage capacities.

Moreover, India’s crude oil imports from the US have surged by over 50% in the first half of 2025 compared to the previous year, while imports from Brazil have risen by 80%. This diversification strategy reflects India’s proactive approach to securing its energy needs. Oil Minister Hardeep Singh Puri has also downplayed concerns about the impact of potential sanctions, asserting that India is well-prepared to adapt to any disruptions in its oil supply.

Evaluating the Likelihood of US Tariffs

Industry insiders suggest that Trump’s warning regarding secondary tariffs may be more of a strategic negotiation tactic than a definitive policy shift. Executives in the oil sector believe that imposing such tariffs could backfire, leading to increased oil prices globally and adversely affecting US consumers. The potential for elevated import costs could create significant political challenges for the Trump administration.

Russia continues to maintain substantial oil export volumes, accounting for about 5% of global consumption. As discussions around tariffs unfold, the global oil market remains vigilant, with many stakeholders closely monitoring the situation. The interplay between geopolitical strategies and energy trade will be crucial in determining the future of India’s crude oil imports and its broader energy security.

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