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Donald Trump has increased the pressure on India to reduce its Russian oil purchases. It could cost Moscow vital revenues, but will mainly push more Russian crude oil onto an ever-growing shadow market. The U.S. President said that Indian Prime Minister Narendra modi had pledged on Wednesday to stop purchasing oil from Russia. India has not yet confirmed this agreement.

Since the 2022 invasion of Ukraine by Moscow, India has been a major buyer of Russian crude oil. According to the International Energy Agency, India purchased 1.9 millions barrels of crude oil per day in the first nine month of 2025. This represents 40% of the country's total exports. The U.S. is putting pressure on New Delhi at the same time that Kyiv is attacking Russia's energy infrastructure. Trump seems to be focusing on the resolution of the conflict in Ukraine again after negotiating a Gaza ceasefire. After a "successful phone call", Trump announced last week that the Russian President Vladimir Putin and he will meet for another summit.

All of this suggests that the West may be entering a different stage in its efforts to squeeze the Kremlin. So, barring any breakthroughs at the next summit, India's pressure to reduce its Russian crude purchases is not likely to ease.

A FINANCIAL HIT

India will likely give in to U.S. demands as part of an overall trade agreement. Washington has already imposed a 25% tariff on Indian imports in response to New Delhi's purchase of Russian oil. Some Indian refiners have already begun to reduce their Russian oil imports. However, any reduction won't show up until December. Indian refiners are also facing a new challenge. As of January 21, 2019, the European Union will ban imports of fuel refined using Russian crude. Over a third (35%) of India's aviation and diesel fuel is exported to Europe.

India's refineries will be affected by the new U.S./EU measures, since they are currently enjoying healthy margins from buying Russian crude oil at substantial discounts to international prices.

The energy markets of the two countries are already intertwined. Last year, Reliance, a private refiner that operates one of the largest refining facilities in the world, located in western India signed a 10-year contract with Rosneft, supplying nearly 500,000 barrels per day of crude oil. Rosneft owns 49% of Nayara's Vadinar refinery, which relies solely on Russian oil for its 400,000 barrels per day. It has already faced EU and British sanctions which have forced it to lower its operating rates. However, it is unlikely that it will completely stop importing Russian crude.

CHINA, to the rescue?

Let's say India is able to drastically reduce its Russian oil purchase, even if they can't be reduced to zero. What happens to the Russian crude oil volumes India ceases to buy?

Chinese refiners could increase their purchases if international prices drop. China is still the largest buyer of Russian crude oil. Between January and September, it imported 2.1 million barrels per day (bpd) via land and water, which represents roughly 18% the total amount of crude oil imported by the country. This year, it has tightened its energy relations with Moscow and imported liquefied gas from a Russian plant heavily sanctioned.

Beijing has never relied on a single country for more that 20% of its imports. By that measure, refiners have limited capacity to increase the number of Russian barrels India is expected to reduce.

Trump also puts pressure on China to cut back its Russian oil purchases, amid simmering tensions in trade between the two world's largest economies. Beijing may be hesitant to further provoke Washington, especially given that it already has the ability to buy crude oil at attractive prices.

SEEK THE SHADE

The shadow market will likely absorb any remaining Russian barrels.

Russia has built a vast fleet of old tankers in order to avoid international sanctions. According to the Centre for Research on Energy and Clean Air, 69% (of Russia's seaborne crude oil exports) were transported on "shadow fleets" tankers in September.

The vast scheme uses mid-ocean oil transfers between ships to hide the origins of oil supplies.

The shadow market is likely to be the final destination for any Russian oil which would have normally been shipped directly to India. The country of origin will be hidden, so it may end up anywhere, including India. Losing a large market like India will definitely reduce the number of Russian buyers. This will force Russia to offer oil at higher discounts, reducing its revenue. The lower gas and oil prices have already impacted the budget of Moscow.

The West's attempts to squeeze Russia's oil industry will not lead to a decrease in Russian exports or production. It may be that they reduce the visibility of a market which is becoming increasingly opaque.

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(source: Reuters)