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From April 2022 to June 2025, India purchased 17-19 lakh barrels of Russian crude oil daily from Russia.
India has reduced oil purchases from Russia for the first time in 4 years. According to the report of the Ministry of Commerce and Industry, Russia’s share was 41% in September 2024, which decreased to 31% in September 2025. A major reason for this is America’s 25% extra tariff on India.
President Trump says that India is buying and selling crude oil from Russia at a lower price. This is helping Putin to continue the Ukraine war. However, this is not the only reason due to which India is avoiding buying Russian oil. International circumstances have changed rapidly in the last one year.
Know 5 reasons for the decline in Russian oil purchases…
1. Profit of Russian oil reduced due to American tariff, loss increased
From April 2022 to June 2025, India purchased 17-19 lakh barrels of Russian crude oil daily from Russia. This saved India $17 billion. Indian companies also benefited crores of rupees, but due to buying Russian oil, Trump imposed 25% tariff on India in August.
According to an India Today report, Trump’s extra tariffs could cause a loss of about $37 billion to Indian exports and the GDP growth rate could fall to 1%.
2. Loss to India due to ban on Russian companies
In November, America imposed stringent sanctions on Russia’s two largest oil companies ‘Rossneft’ and ‘Lukoil’. These two companies supplied about 60% of Russia’s oil to India. This made direct supply of Russian oil to India difficult.
As soon as US sanctions came into effect, it became illegal to make any kind of payments, banking transactions, insurance or shipping from these companies. This had a direct impact on India, because Indian refineries were most dependent on these two companies.
Immediately after the ban came into effect, Indian banks stopped payments to these Russian companies. As soon as the payments stopped, Indian oil companies also started withdrawing purchase orders.
3. Russia reduced discounts
After the Ukraine war, Russia started selling cheap crude oil at $20-25 per barrel. At that time, the price of crude oil in the international market was $130 per barrel, hence this discount was economical for India.
However, now the price of crude oil in the international market has reached $63 per barrel. Russia has also reduced its discount to 1.5 to 2 dollars per barrel. With such a low concession, India is not getting the same benefits as before; on top of that, the shipping and insurance costs involved in bringing oil from Russia are also high.
For this reason, India is now again buying oil from stable and reliable suppliers like Saudi, UAE and America, because now there is no longer a huge price difference as before.
4. EU refuses to accept products made from Russian oil
european The Union (EU) has made a new rule, under which after January 21, 2026, it will not buy diesel, petrol or jet fuel made from Russian crude oil from countries like India, Turkey and China.
This rule is part of Europe’s 18th sanctions package brought to put economic pressure on Russia. Till now India used to buy cheap Russian oil, refine it and sell it to Europe, but now this route will almost be closed.
In 2024–25, India sold about half of the products made from Russian oil to Europe, so the new rule has a direct impact on India.
The EU also wants selling countries to provide proof that their fuel does not contain Russian oil. For this, the refinery will have to keep its crude stream separate or stop using Russian oil for 60 days. If there is doubt, the bank can also stop financing.
5. Russia is not ready to accept payment in rupees
In the last two years, India has purchased a lot of crude oil from Russia. Whereas India has exported very little to Russia. Due to this imbalance, Russia has accumulated a lot of Indian rupees.
Russia cannot easily exchange it into dollars nor use it in trade with other countries.
The reason for this is that at the international level, Rupee is not a currency which can be easily accepted by most of the countries of the world or which can be easily exchanged in the global market. In such a situation, Russia is not able to use the money anywhere. Therefore he avoids taking payment in this.
Apart from this, the biggest problem after buying cheap oil from Russia is payment. America and Europe have imposed many types of economic sanctions on Russia. For this reason, international banks remain very cautious about transactions related to Russia. When India sends payments to Russia, sometimes the transactions get halted or take a lot of time to be approved.
There is a risk of American pressure and sanctions when paying in dollars, so sometimes money has to be sent through a third country bank, which makes the process more complicated. All this impacts Indian oil companies. Oil may be cheap, but due to stoppage of payment, the shipment also reaches late.
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