India continues to buy cheap Russian crude oil, despite being punished for it by the United States, which in August imposed a 50 percent tariff on Indian exports to America, including a 25 percent penalty for importing Russian crude.
The US tariffs on India are some of the highest in the world. Citigroup estimates the combined 50 percent tariff poses between a 0.6 and 0.8 percent downside risk to India’s annual GDP growth.
Finance Minister Nirmala Sitharaman said on Sept. 5 that the country will keep buying Russia oil, defying demands from US President Trump to halt the purchases due to Russia’s war with Ukraine.
“Where we buy our oil from, especially a big-ticket foreign exchange item where we pay so much, highest in terms of import, we will have to take a call on what suits us best,” Sitharaman said in a television interview on Friday, via Bloomberg. “We will undoubtedly be buying.”
India produces about 29.4 million tonnes of crude oil annually, which falls significantly short of demand, forcing the country to import about 85% of its oil needs. India’s production of oil and gas has been steadily declining since 2011.
According to Visual Capitalist (VC), India’s imports of Russian crude rose from less than 1 percent before the war in Ukraine to 37 percent in 2024. Iraq is the second-largest importer, at 21 percent of the total. The United States drives just 9% of India’s crude imports.
However, NPR notes the US is a major importer of Indian products made from Russian oil.
Last year, India’s imports of Russian crude surpassed 1.7 million barrels per day. Reliance Industries, the country’s largest conglomerate by market cap, buys about a third of this total, the VC website states.
A record 1.95 million bpd of Russian crude was purchased by India in May, bumping its import percentage to 40 percent. Imports from the Middle East fell to a record low of about 39% in May, versus 44% in April, with Iraqi imports down about 13.7 percent and supply from Saudi Arabia dropping by 15 percent.
Reuters notes the landed price of Russian crude oil is far cheaper than Middle East crude, with a barrel of Russian crude selling for $68.21 in April compared to $570 a barrel from Iraq and $637.40 a barrel from Saudi Arabia, citing government data.
OPEC's share of India's oil imports in May fell to a record low of 42.6 percent, Reuters added.
While US imports were only 158,000 barrels per day in 2024— less than a tenth of the total — major refiners like Indian Oil Corp and Reliance Industries bought five million barrels and 2 million barrels, respectively, in August, helping to narrow the US trade deficit with India.
An opposite trend sees India cutting its share of fossil fuel output. On Sept. 2 Reuters reported that Clean electricity production in India has surged by 20% to new highs so far this year, giving utilities a rare chance to cut fossil fuel-fired generation and reduce reliance on energy imports for power production.
India's clean electricity sources are also on track to provide a third of its utility electricity for the first time over the next month or so, thanks to record combined output from renewables, hydro and nuclear assets, data from Ember shows
Over the first half of 2025, India's utilities generated a record 236 terawatt hours (TWh) of clean electricity, data from Ember shows.
That total is 20% more than during the same months in 2024, and allowed utilities to curb generation from fossil fuels by 4% from the year before to around 691 TWh.
A 29% jump in wind generation (to 47.2 TWh) and a 25% rise in solar generation (to 85 TWh) were the main drivers of the advance in clean electricity supplies.
According to the International Energy Agency, coal was the largest source of India’s total energy supply in 2023 at 46 percent, followed by oil at 25 percent.
Coal provided 54% of the country’s domestic energy production, followed by biofuels and waste at 30.3 percent, crude oil at 4.7 percent, and renewables at 2.8 percent.
Nearly three-quarters of India’s electricity (74 percent) comes from coal, compared to 6 percent from solar, 7.2 percent from hydro and just 0.2 percent from oil.
By Andrew Topf for Oilprice.com
