RUSSIAN OIL FOR INDIA

FT - February 4 2026 - Indian leaders have warmly welcomed Donald Trump’s announcement of a long-awaited trade deal with the US — but they are being much more reticent about the breakthrough the president says made it possible: a claimed commitment by New Delhi to stop buying Russian oil.

Prime Minister Narendra Modi made no mention of oil when he hailed Trump’s “wonderful announcement” on Monday. Nor did his commerce minister on Tuesday as he suggested negotiators at the talks had still to reach a “final understanding” on a deal Trump says will cut punitive US tariffs.

Any halt to India’s purchases of Russian oil would have far-reaching implications, testing New Delhi’s “strategic partnership” with Moscow, adding to the strain on Vladimir Putin’s government of funding its war in Ukraine and creating a major challenge for Indian refiners used to easy access to discounted crude. 

But India’s reluctance to confirm such a pledge is fuelling deep scepticism among analysts that any substantial cut is imminent.

“Broadly, India has been diversifying away from Russia, that process will continue,” said Harsh Pant, a foreign policy expert at the New Delhi-based Observer Research Foundation think-tank. “But if the issue is that immediately India will disrupt oil supply from Russia because of this trade deal — that’s unlikely to happen.”

New Delhi has also sidestepped queries about Trump’s announcement in a social media post on Monday that Modi had agreed to remove Indian tariffs and barriers to US exports and committed to vast purchases of American goods as part of a deal cutting US tariffs from 50 per cent to 18.

“US President Trump’s claims that India will slash duties to zero, stop importing Russian oil, and raise US imports to $500bn have not yet been confirmed by the Indian authorities, and they look unrealistic to us,” said Alexandra Hermann, lead economist at Oxford Economics.

The White House declined to comment further on Trump’s claims.

Indian stocks and the rupee rallied on Trump’s remarks on Tuesday, but halting Russian oil purchases in particular would be a major concession for the Modi government, which has repeatedly insisted that buying crude wherever it wants is a matter of “strategic autonomy”. 

Still, even a less dramatic reduction of India’s reliance on Russian energy would be significant. India became the biggest buyer of seaborne Russian crude after the full-scale invasion of Ukraine in 2022, but has already almost halved purchases to just over a million barrels a day from a peak of more than 2mn b/d in June.

“I don’t think India committed that they will completely stop buying Russian oil, but India did commit to reduce its purchases,” said Mukesh Aghi, CEO of the US-India Strategic Partnership Forum, a Washington-based business lobby. “The time period is still a work in progress.”

Any reduction of the Indian market would add to Moscow’s fiscal woes. Russian energy revenues fell 24 per cent year-on-year in 2025 following US sanctions against oil majors in October. Energy, mainly the oil sector, now accounts for about 20 per cent of total government revenue, its lowest share in at least a decade.

By contrast, Trump said on Monday that India had agreed to buy “much more” oil from the US and also, “potentially”, from Venezuela.

Just last week Delcy Rodríguez, Venezuela’s interim president, said she had a “fraternal” conversation with Modi, singling out energy as an area where they had agreed to “deepen and expand” their partnership.

According to Goldman Sachs, India increased crude oil imports from the US to around 7 per cent of its share of such imports between April and November, from around 4 per cent in the year to March 2025.

Indian refiners, including Reliance Industries, controlled by Asia’s richest man Mukesh Ambani, were big buyers of Venezuelan crude before Trump tightened sanctions on deposed strongman Nicolás Maduro’s regime in 2019.

Venezuela’s heavy crude is relatively cheap because of its lower quality, making it appealing to Indian refiners seeking to replace discounted Russian oil. Government data shows India imported $1.4bn worth of crude oil from Venezuela in the year to March 2025 following the easing of some US sanctions, but that was still far below the $6bn it bought in 2019-20.

Doubts surround Venezuela’s ability to supply more oil. Rystad Energy, a Norway-based consultancy, estimates the country needs some $53bn of upstream and infrastructure investment over the next 15 years just to keep crude oil production flat at 1.1mn b/d. 

ClearView Energy Partners, a Washington-based consultancy, said about 400,000 barrels per day of supply of Venezuelan heavy crude could potentially switch from Chinese to Indian customers, although this would depend on price.

A revival of oil flows from Venezuela could provide a particular opportunity for Reliance, India’s largest private oil refiner, which said in November it would stop using Russian crude at one of its largest plants after the US imposed sanctions on major suppliers Rosneft and Lukoil.

But the best substitute for “medium-sour” Russian crude might be similar grade oil from the nearby Middle East, ClearView said.

According to provisional data from Kpler, India bought twice as much oil from Qatar and Kuwait last month as in January 2024. But there has not been a similar increase in imports from Iraq, Saudi Arabia or the UAE, whose crudes often sell at higher prices. 

Indian refiner Nayara Energy, which is owned by Russia’s Rosneft, is the country’s main buyer of Russian oil and would stop only under strong pressure from the government, said Sergey Vakulenko, a senior fellow at the Carnegie Russia Eurasia Center. 

“It is already under US, EU and UK sanctions and has little to lose,” Vakulenko said. “India will likely reduce its purchases of Russian oil, at least for the time being. It is less likely that India will stop buying it altogether.”

Sumit Ritolia, a lead Kpler analyst in New Delhi, said Indian imports of Russian oil were expected to remain broadly stable at between 1.1mn and 1.3mn barrels a month in the first half of the year.

“Russian volumes are largely locked in for the next six to 10 weeks and remain economically critical for complex Indian refiners,” said Ritolia. “Instead, the deal reinforces an ongoing diversification trend, with US crude emerging as the primary marginal winner.”
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