The latest threat of US tariffs of up to 100% on buyers of Russian oil has exposed how difficult it would be for Indian refiners to replace their most important crude source at short notice. Russian crude accounted for 47% of India’s imports since the Iran war began, according to industry executives cited by The Economic Times, while supplies from Saudi Arabia and the United Arab Emirates have also become less dependable.
That combination turns a geopolitical dispute into an energy and urban-economy problem. India’s refiners do not simply need to find another seller. They need replacement barrels, tankers, refinery-compatible grades, insurance and workable payment arrangements at a time when the report says global inventories are depleted and tanker freight rates are at record highs. Any rapid scramble by India and other major buyers could push crude prices higher, increasing pressure on transport, industry and household budgets.
The immediate uncertainty comes from legislation passed by the US Congress that empowers President Donald Trump to impose tariffs of up to 100% on India, China and other buyers of Russian oil. The legislation does not mean the penalties will be imposed immediately. US ambassador to India Sergio Gor said on August 22 at The Economic Times World Leaders Forum that the bill was being advanced by Congress rather than the White House.
“The bill is being pushed by the Congress in a very bipartisan way. This is not something that you have seen the White House advocate for,” Gor said, according to the report. “And, I think, that’s important to understand as people here say, you know, President Trump is pushing it. You won’t find a clip of (him) pushing it.”
That distinction matters for Indian refiners because the risk is not yet a confirmed supply cut. It is a policy threat that can alter purchasing decisions, freight markets and price expectations before any tariff is formally imposed. Some industry executives cited in the report believe Trump may not rush to apply the new tariff, partly because another disruption to the oil market could raise fuel prices before the US midterm elections and add to inflationary pressure.
Yet the market conditions described in the report leave India with less room for manoeuvre than it had during the previous tariff episode. Russia, Saudi Arabia and the UAE accounted for two-thirds of India’s crude imports between March and August. The concentration shows that India has diversified its relationships across several large producers, but it also shows the limits of diversification when multiple major sources become vulnerable at the same time.
Saudi supplies, which represented about 9% of India’s imports, were disrupted by drone attacks on a crucial pipeline last week, the report said. The article also said the US blockade of Iranian exports had further reduced available barrels. These developments mean that replacing Russian crude cannot be treated as a simple shift from one supplier to another. The alternative supply pool is already under pressure.
For refiners, the technical question is as important as the diplomatic one. Crude oils differ in quality, composition and processing requirements. The supplied report does not provide a refinery-by-refinery assessment of which Indian plants could substitute Russian grades, but its reference to the difficulty of finding replacement barrels and vessels points to a wider logistical constraint. A buyer may identify crude in the market and still be unable to secure timely shipping at a commercially viable rate.
Freight is particularly important because India imports most of the crude required by its refining system. The report describes tanker freight rates as being at record highs. If several importing countries seek vessels simultaneously, transport costs could rise alongside crude prices. That would increase the delivered cost of oil even before any US tariff is added.
The urban consequences would not be confined to petrol pumps. Diesel prices are already at a record high, according to the report. Diesel is closely connected to freight movement, buses, construction equipment, agricultural logistics and backup power for commercial activity. A sustained increase in the cost of imported crude can therefore move through the urban economy via transport operators, manufacturers, retailers and service providers.
The effect on consumers would depend on how refiners and fuel retailers absorb or pass through higher costs, a question not settled by the report. It would also depend on the duration and scale of any supply disruption. But the structure of the risk is clear: when replacement barrels are expensive and difficult to transport, India’s energy choices become more costly even if physical fuel shortages do not occur.
India faced a similar policy choice when the US imposed a 25% tariff on Russian oil purchases in August 2025. According to the report, India chose to bear the cost of the tariff rather than cut Russian imports. Imports subsequently rose for three months, reaching 1.8 million barrels a day in November 2025. They then fell to 1 million barrels a day by February, when the tariff was lifted as discussions between the US and India progressed.
The episode offers an important institutional lesson. Energy trade decisions are not made only by refiners responding to spot prices. They are shaped by diplomacy, sanctions, tariff negotiations and the government’s assessment of energy security. The United States said India had agreed to halt Russian crude purchases as the reason for lifting the earlier tariff. India did not publicly accept that it had made such a commitment, according to the report.
That unresolved difference in public positions adds uncertainty to the present situation. Refiners must plan purchases under a policy environment in which the possible commercial penalty is substantial, while the Indian government must balance foreign-policy pressure against the cost and availability of alternative supplies. The central administrative challenge is to maintain fuel security without allowing energy dependence to become a bargaining instrument in wider trade negotiations.
The report’s import figures also show why the issue has significance beyond the oil sector. Russia, Saudi Arabia and the UAE supplied two-thirds of India’s crude imports during the six-month period cited. Russian crude alone accounted for 47% of imports since the Iran war began. These numbers indicate that the current supply network is concentrated around a small group of very large producers and that disruptions affecting more than one of them can quickly become a national planning problem.
The relevant comparison is not simply between Russian and non-Russian crude. It is between a relatively low-cost and established supply arrangement and a replacement system that may require more expensive crude, longer voyages or higher freight charges. The report does not quantify the precise price difference between these options, but it identifies each of the principal pressure points: depleted inventories, disrupted Gulf supply, restricted Iranian exports and limited vessel availability.
This is also why the question cannot be reduced to whether the proposed tariff is ultimately imposed. The prospect of a tariff can affect procurement behaviour before implementation. Refiners may seek alternative cargoes, traders may bid up available supply, and tanker demand may increase. In turn, the market can transmit the risk into crude benchmarks, freight rates and domestic fuel costs.
The reported Brent price of around $105 a barrel provides a snapshot of the market environment described in the article. It does not establish how prices will move next, and the report does not provide a forecast. It does show that the potential loss or disruption of a major source would occur in a market that is already described as fragile rather than comfortably supplied.
For Indian cities, the policy question is therefore one of resilience. Urban economies depend on continuous movement: workers travel, goods enter markets, construction materials reach sites and public and private transport systems operate daily. The supplied material does not establish that any of these services face an immediate interruption. It does, however, show how external energy shocks can reach cities through the cost of mobility and logistics.
The evidence currently confirms three facts. India relies heavily on Russian crude; the alternatives identified in the report are facing their own disruptions or logistical constraints; and the proposed US tariff creates a potentially severe commercial risk without yet amounting to an immediate penalty. What remains uncertain is whether the tariff will be imposed, how Indian refiners would respond, and whether replacement supplies could be secured without a sharp increase in prices.
The next developments to monitor are the US administration’s position on implementing the legislation, the response of Indian refiners, the restoration of disrupted Saudi supplies, tanker freight rates and the trajectory of Indian crude imports. Until those questions are clearer, Russia’s role in India’s oil basket remains not only a trade issue but a test of the country’s energy and urban-economic resilience.
