Washington’s effort to push India away from Russian oil is being undercut by the regional war with Iran, which has disrupted Middle East supply routes and forced New Delhi back towards the very crude the United States had spent months trying to curb, reports CNN.
For much of last year, the White House sought to reduce the cash flowing into Moscow’s war machine by weakening Russia’s oil trade with one of its most dependable buyers, India. Under President Donald Trump’s pressure campaign, Washington imposed steep tariffs on many Indian exports and sanctioned two of Russia’s largest oil firms.
That approach appeared to yield results. India did not stop buying Russian crude altogether, but it reduced purchases and leaned more heavily on supplies from the Middle East.
That shift is now being reversed.
Last week’s joint US-Israeli offensive against Iran effectively closed the Strait of Hormuz, the narrow waterway through which almost all Middle Eastern oil exports pass. Iran has also threatened to strike energy infrastructure in neighbouring countries after airstrikes hit major energy storage sites in Tehran.
The fallout has rattled global energy markets. Oil prices climbed above $100 a barrel on Sunday for the first time since Russia’s 2022 invasion of Ukraine, driven by fears of broader supply disruptions and tighter restrictions on production.
With Middle Eastern flows in jeopardy, India is again looking to Russia.
In a sign of how sharply circumstances have changed, Washington last week granted Indian refiners a 30-day waiver allowing them to buy Russian crude already stranded at sea. US Treasury Secretary Scott Bessent said the step was taken “to enable oil to keep flowing into the global market.”
The waiver marked a notable turn in policy. After months of pressing India to cut Russian purchases, the United States has now temporarily allowed New Delhi to resume them, even though the revenue continues to support the same Russian war effort Washington had tried to weaken.
Russia had already found a way around Western restrictions after the full-scale invasion of Ukraine in 2022. As Europe and other Western countries banned seaborne Russian crude, Moscow redirected exports eastward, with China and India emerging as major buyers of discounted oil.
India, home to 1.4 billion people and the world’s fastest-growing major economy, defended those purchases as essential to its energy security.
After returning to office just over a year ago, Trump moved to break that link. Last August, he announced plans for heavy tariffs on India, accusing New Delhi of benefiting from the Ukraine war by buying cheap Russian crude and selling refined products at global prices.
Washington went on to impose 50 per cent tariffs on Indian goods, with half of that directly tied to punishment for Russian oil purchases. It later sanctioned two major Russian oil firms in an attempt to choke off a key source of Kremlin revenue.
After months of negotiations, the United States eased those tariffs last month in return for an Indian concession to tighten the tap on Russian crude.
That pledge is now coming apart under the pressure of war in the Gulf.
Data from analytics firm Kpler show that the Strait of Hormuz handles 2.5 million to 2.7 million barrels of India’s daily crude imports, most of them from Iraq, Saudi Arabia, Kuwait and the United Arab Emirates. With that route effectively paralysed, Russian barrels are an obvious fallback.
Kpler data showed about 130 million barrels of Russian crude at sea as of Friday. In a note, the firm said some of those volumes could be redirected to Indian ports relatively quickly. Sumit Ritolia, a research analyst at Kpler, said India could go “back again to pre-sanctions level, buying around 40-45% of crude from Russia.”
Even so, Russian supply cannot fully replace Gulf volumes. Farwa Aamer, director of South Asia Initiatives at the Asia Society Policy Institute, said the 30-day waiver was only a “temporary measure” with “limitations, conditions and a deadline.”
“This waiver may offer temporary relief for India, but it is not enough to fulfil the energy demands of the market,” she said.
Russian shipments also take longer to reach India than cargoes from the Middle East.
A source in India’s oil ministry told CNN on Saturday that the country had about 25 days of crude oil inventory and another 25 days of petrol and diesel stocks, giving it nearly eight weeks of total cover in crude and petroleum products.
“In terms of our current stock, we are in a comfortable position. We are going to ramp up our supplies from other parts of the geographies and make up for our supply crunch from the Straits of Hormuz,” the source said.
Bessent told Fox Business on Friday that Washington could go further.
“To ease the temporary gap of oil around the world, we have given (India) permission to accept the Russian oil. We may unsanction other Russian oil,” he said.
Aamer said the longer the Middle East crisis lasts, the greater the risk to oil-importing economies such as India.
