Donald Trump tariffs: How much will India’s fuel bill rise if it stops Russian crude oil imports & where would it buy from? Explained

Faced with the prospect of Donald Trump’s 50% tariff rate on its exports to the US, if India decides to stop crude oil imports from Russia, it would have to pay an additional cost. The State Bank of India (SBI) has projected that India's crude oil import expenses could rise between $9 billion to $12 billion if Russian crude oil purchases stop.According to the analysis, discontinuing Russian oil imports for the remainder of FY26 could result in a $9 billion increase in the fuel bill during FY26, whilst FY27 might witness an escalation of $11.7 billion owing to price rises.“If India stopped oil imports from Russia during the rest of FY26, then India's fuel bill might increase by only $9 billion,” SBI has said in a report.Also Read | India-US trade deal: With Donald Trump’s 50% tariffs looming, India reviews market access offers for US; three-pronged strategy to protect exporters

India’s love for Russian oil

Since 2022, India has significantly enhanced its Russian oil procurement, which was available at discounted rates with a $60 per barrel cap.

This strategy aimed to ensure energy security after Western countries imposed sanctions on Moscow and avoided Russian supplies following the Ukraine invasion.Russia has become India's primary oil supplier, with its contribution to India's total oil imports rising significantly from 1.7% in FY20 to 35.1% in FY25. Of India's total oil imports of 245 MMT, Russian crude accounted for 88 million metric tonnes (MMT) in FY25.

Prior to the Ukraine conflict, India's main crude suppliers were Iraq, Saudi Arabia and the United Arab Emirates (UAE), in that order.Russian oil constitutes 10% of worldwide crude supply. A complete global boycott of Russian oil could trigger a 10% surge in crude prices, assuming no additional production from other nations.Indian refineries typically procure oil from Middle Eastern producers through yearly agreements that offer monthly supply adjustment options.

Following Russian sanctions, refiners have expanded their procurement network to include suppliers from the United States, West Africa and Azerbaijan.Also Read | Explainer: Donald Trump’s 50% tariffs - will India budge on Russia crude oil trade?India has expanded its oil procurement network to approximately 40 nations. The addition of new suppliers from Guyana, Brazil and Canada has strengthened India's energy supply security.India has the option to revert to its established Middle Eastern oil partners through ongoing yearly agreements if Russian oil deliveries cease, providing adaptability in managing its import requirements, SBI said in its report.

The SBI analysis noted that despite substantial potential rises in import expenses, India's broad network of suppliers and current agreements with various oil-producing countries could help minimise disruptions.

Nevertheless, any reduction in Russian oil exports would likely drive global crude prices higher, leading to increased costs overall.

Trump’s pressure of 25% additional tariff on India

Trump's decision to impose 25% additional tariffs on India due to its Russian oil purchases aims to exert pressure on Vladimir Putin to conclude the Ukraine war, according to experts.Trump has demanded India cease buying discounted oil from Russia, stating it "fueling the war machine" in the Ukraine conflict. This stance reflects his twin goals of decreasing America's trade deficit with India whilst advancing talks with Russian President Putin to resolve the Ukrainian situation.While the 25% baseline tariff on India takes effect today, the supplementary 25% duty targeting India's Russian oil trade will commence from August 27.

Analysts suggest the 21-day interval provides an opportunity for diplomatic discussions between India and the United States.Also Read | ‘Worse than Covid’: Donald Trump’s 50% tariffs on India leave exporters troubled; will US move impact China+1 strategy?In a strong statement, India has called America’s additional tariffs unjustified. “The United States has in recent days targeted India’s oil imports from Russia. We have already made clear our position on these issues, including the fact that our imports are based on market factors and done with the overall objective of ensuring the energy security of 1.4 billion people of India. It is therefore extremely unfortunate that the US should choose to impose additional tariffs on India for actions that several other countries are also taking in their own national interest.

We reiterate that these actions are unfair, unjustified and unreasonable. India will take all actions necessary to protect its national interests,” the ministry of external affairs statement said earlier this week.