Indian refiners stop buying Russian crude amid Trump threat, low discounts

Indian Oil Corporation, Bharat Petroleum Corporation, Hindustan Petroleum Corporation, and Mangalore Refinery and Petrochemicals Ltd have not placed new orders for Russian crude

India’s state-run oil refiners have stopped purchase of Russian crude over the past week as price discounts narrowed and pressure intensified from US President Donald Trump, Reuters reported citing industry sources.

 

Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL), Hindustan Petroleum Corporation (HPCL), and Mangalore Refinery and Petrochemicals Ltd (MRPL) have not placed new orders for Russian crude recently.

Why Indian oil PSUs halted Russian purchases? 

According to Reuters, the suspension follows a drop in discounts on Russian crude to their lowest levels since 2022, undermining the economic case for continued imports. The pullback comes as Russian exports shrink and demand remains steady, squeezing discounts that were earlier driven by Western sanctions following Moscow’s invasion of Ukraine.

 

 

Additionally, refiners are concerned that the European Union’s latest curbs could complicate overseas transactions and financing, even for buyers adhering to the price cap mechanism. 

 

The decision also comes amid escalating geopolitical pressure. On July 14, US President Donald Trump threatened to impose 100 per cent tariffs on countries buying oil from Russia unless Moscow agrees to a comprehensive peace deal with Ukraine.

 

With economic and strategic factors aligning, Indian state-run refiners, which typically buy Russian crude on a delivered basis, are now sourcing alternatives from the spot market. These include Middle Eastern grades like Abu Dhabi’s Murban crude and West African supplies.

 

Russia’s role in India’s energy imports 

India, the world’s third-largest oil importer, has emerged as the biggest buyer of seaborne Russian crude in recent months. Russia accounts for roughly 35 per cent of India’s total crude oil supplies and remains a critical revenue source for Moscow as the war in Ukraine enters its fourth year.

 

In the first half of 2025, private refiners purchased nearly 60 per cent of India’s average 1.8 million barrels per day (bpd) of Russian oil imports, reported Reuters. State-run refiners, which control over 60 per cent of the country’s 5.2 million bpd refining capacity, procured the remainder. 

 

Trump imposes 25% tariffs on Indian goods 

In a separate development, Trump on Wednesday announced a 25 per cent tariff on all goods imported from India starting August 1. While he noted that negotiations with India were ongoing, he also warned of further penalties related to Indian purchases of Russian energy and military equipment.

 

Adding to the pressure, Trump on Monday shortened the deadline for secondary sanctions on buyers of Russian exports to 10–12 days, down from the previous 50-day grace period. The reduced timeline will apply if Moscow fails to reach a peace agreement with Ukraine.

 

US sanctions six Indian cos over Iranian oil trade 

The US State Department on Wednesday sanctioned six Indian companies for allegedly trading in Iranian petroleum and petrochemical products. The move is part of a broader enforcement action targeting 20 entities globally and reflects Washington’s continuing crackdown on violations of its sanctions regime against Iran.

 

These Indian firms now face a freeze on all US-based assets and a prohibition on dealings with American individuals or companies. The sanctions also extend to any subsidiaries in which the designated entities hold 50 per cent or more ownership.