Tankers carrying Russian oil are heading towards Indian ports even as the US tariff guillotine descends with savage brutality Wednesday morning.
Initial indications are that India’s buying is about to drop sharply in August from the two earlier months. But first glances can be deceptive.
Oil industry experts reckon that Russian crude currently on its way to India is about 1 million barrels per day (bpd) for August. That's around 40 per cent lower than India’s purchases in June and July.
But could there be more on the way? Several ships are heading towards Port Said, the gateway to the Suez Canal. Such vessels often end up in India, though many have yet to declare their final destination.
“In the past, we’ve seen such ships update their final destinations while en route,” says Sumit Ritolia, lead research analyst at the data firm Kpler. “We should get a clearer picture as vessels enter the Red Sea and beyond.”
In June India bought 2.1 million barrels a day of Russian crude; in July, 1.6 million. Ritolia says several tankers that recently slipped out of Russian ports without listing a destination have repeatedly ended up at Indian refineries.
If they are on the same track again, arrivals in September and October could push August imports back up towards 1.7 million barrels a day. There is, of course, the possibility that these ships are heading to other Asian destinations, to buyers who have no qualms about purchasing Russian oil.
Delhi’s Moscow pivot
India once relied mostly on crude oil from the Gulf. Even today its second-biggest consignments come from Iraq and Saudi Arabia. But from mid-2022, it pivoted hard to Moscow, tempted by hefty discounts. Refiners, both state and private, quickly scaled up, soon taking around 2 million barrels a day and selling refined products on to the US and Europe.
All of India’s oil companies, both private and public sector giants, saw an opportunity and increased their purchases. India even began exporting a refined product called vacuum gas oil (VGO) to the US. A large chunk of refined products went to Europe.
Washington tolerated the flows, wary that pulling Russian crude from the market entirely would send global prices through the roof.
That changed this month. Trump, already angry with New Delhi, slapped on a 25 per cent tariff because of its Russia crude imports. This took the total duty faced by India to 50 per cent. By contrast, Pakistan pays 19 per cent; the EU, 15 per cent. India, uniquely, is being punished for buying Russian oil.
The Trump administration has accused India of propping up Moscow’s war effort in Ukraine by snapping up discounted barrels. Washington argues that the windfall has not only stabilised Russia’s economy but also allowed Indian refiners to pocket handsome profits.
Treasury secretary Scott Bessent recently accused “affluent Indian families” of “unacceptable opportunistic arbitrage,” claiming they had reaped $16 billion in surplus profits, a figure the US has yet to explain in detail.
The easy option for India would be to retreat. But that risks a humiliating loss of face, particularly with China still the world’s biggest buyer of Russian crude and facing no penalties.
So far, India is standing firm. The government has not told refiners to cut back immediately. There are hints it may ease off gradually rather than pull the plug overnight. Officials in New Delhi have insisted they will continue purchasing some amount of Russian oil to safeguard energy security.
External affairs minister S. Jaishankar dismissed the US argument as selective. “It is presented as an oil issue but it's still not applied to the largest importer, China. Arguments used to target India have not been applied to China,” he said.
“At the end of it all, we make decisions that are in national interest,” he added.