India-US Trade Agreement: New Delhi Considers Reducing Russian Oil Imports Following Tariff Relief, Sources Say

India is set to impose restrictions on crude oil imports from Russia, limiting purchases to cases where supplies are deemed irreplaceable. This decision aligns with a broader agreement with the United States aimed at securing lower trade tariffs. While there is no immediate blanket ban on Russian oil, Indian refiners will cease placing new orders after fulfilling existing commitments. This move follows U.S. President Donald Trump’s announcement of a reduction in reciprocal tariffs on Indian goods, which is contingent upon India’s compliance with the new oil purchasing policy.

Refiners to Wind Down Purchases

Indian refiners, who became the second-largest buyers of Russian crude following the invasion of Ukraine in February 2022, will continue to honor their existing contracts but will not initiate new orders. State-run companies like Hindustan Petroleum Corporation Ltd (HPCL) and Mangalore Refinery and Petrochemicals Ltd (MRPL) have already halted purchases of Russian oil in response to U.S. sanctions imposed last year. Other major refiners, including Indian Oil Corporation (IOC) and Bharat Petroleum Corporation Ltd (BPCL), are expected to gradually reduce their intake of Russian crude. Reliance Industries Ltd, the largest buyer of Russian oil in India, had previously paused its purchases due to U.S. sanctions on key Russian exporters and is likely to stop further acquisitions after fulfilling a recent cargo delivery.

Nayara Energy’s Unique Position

Nayara Energy may be the only exception to the new restrictions on Russian oil imports. The company has been sanctioned by the European Union and the UK due to its ties with Russia, particularly with Rosneft holding a significant stake in the company. As a result of these sanctions, Nayara has found it challenging to source crude from other suppliers, making it reliant on Russian oil obtained from non-sanctioned entities. During discussions with U.S. trade officials, Nayara’s unique situation was highlighted, and New Delhi may seek an exemption for the refinery under the new policy. In the near term, Nayara is expected to continue limited purchases of Russian crude.

Trade Deal and Economic Implications

The agreement with the U.S. also includes India’s commitment to import $500 billion worth of American goods over the next five years, covering sectors such as energy, agriculture, and technology. In 2025, India exported approximately $92 billion worth of goods to the U.S., constituting 20% of its total exports, while imports from the U.S. amounted to $50 billion, or about 7% of total imports. India’s overall oil import bill reached $180 billion, with 30-35% sourced from Russia. The new understanding with the U.S. is expected to significantly reduce the punitive tariffs on Indian exports, providing relief to exporters.

Gradual Shift Away from Russian Oil

Russian oil imports have already been on a decline since the imposition of U.S. sanctions on major Russian exporters. The average import volume fell from 1.2 million barrels per day in December 2025 to around 1 million barrels per day in January 2026. Analysts suggest that under the new agreement, imports could potentially halve in the coming months. However, some experts believe that the immediate impact may be limited, as existing contracts will continue to bind refiners for the next several weeks. Additionally, there are discussions about increasing purchases of U.S. crude and possibly resuming imports from Venezuela, which could provide alternative sources for Indian refineries. Meanwhile, Russia has stated that it has not received any official communication from India regarding the halting of oil purchases, indicating that any transition away from Russian crude will be gradual rather than abrupt.

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