Russia’s 5% Crude Oil Discount Or Donald Trump's 50% Tariff? India's Big Dilemma

New Delhi: Russia expects India to keep buying its crude oil even as the South Asian nation faces mounting pressure from the United States in the form of higher tariffs and public criticism.

Moscow is counting on its discounted supplies to remain attractive for Indian refiners struggling to balance energy costs and inflation at home.

Evgeny Griva, Deputy Trade Representative of Russia in India, told reporters in New Delhi that imports of Russian oil are likely to stay at current levels despite “blackmailing” attempts through sanctions and secondary tariffs.

“We see that after such pressure, cooperation only increases — especially in the financial sphere, with rupee-ruble payments becoming safer,” he said.

US Tariff Threats Loom Large

The US has imposed a 25% tariff on Indian goods and threatened to double it to 50% from August 27, a move that could severely dent India’s $85 billion annual exports to its largest trading partner.

Half of the penalty, US officials say, is aimed at punishing New Delhi’s purchase of Russian crude, which Washington argues helps finance President Vladimir Putin’s war in Ukraine.

However, Russia is offering India a 5% discount on oil supplies, making it cheaper than alternatives from the Middle East and Africa.

For Asia’s third-largest economy, such price concessions have become a critical tool for controlling inflation.

“For India, the advantage of Russian oil is that it can trade at a lower cost, making it a key tool for keeping domestic inflation in check,” Griva noted.

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India's Rising Dependence

Since 2022, when the Ukraine conflict escalated and Western nations imposed a $60-per-barrel price cap on Russian oil, India has emerged as one of Moscow’s top buyers.

From being a marginal importer before the war, India now sources about 1.7 million barrels a day from Russia — nearly 37% of its total crude imports.

Even after a brief pause earlier this month, Indian state-run refiners have resumed large-scale purchases of Russian oil, Bloomberg reported.

The four-week moving average of shipments from Russian ports shows a steady surge in India’s share since the price cap took effect.

Trade Ties Strengthen Despite Pressure

Russian officials insist that bilateral trade remains on a strong growth trajectory despite sanctions.

Griva projected trade volumes between the two countries to expand by about 10% annually, with Indian exports of pharmaceuticals, machine tools and electronic devices increasing alongside Russian crude sales.

Roman Babushkin, Chargé d’Affaires of the Russian Embassy in New Delhi, added that "non-UN sanctions and secondary sanctions are illegal” and accused the West of weaponising the global economy," he said.

“Despite the tremendous sanction pressure on Russia, the Russian economy is growing steadily. You cannot exclude from the global economy such a big and important country,” he added.

India Defends Energy Choices

India, for its part, has defended its right to buy from the cheapest source available, calling Washington’s tariffs “unreasonable.”

Prime Minister Narendra Modi spoke with Putin earlier this week, hailing him as a “friend,” and is scheduled to visit China later this month to meet President Xi Jinping, underscoring a shift in India’s diplomatic balancing act.

External Affairs Minister S. Jaishankar is currently in Moscow to co-chair the Russia-India Intergovernmental Commission with his counterpart Sergey Lavrov.

Talks are expected to cover trade, energy, defence and financial cooperation, with crude oil at the centre of discussions.

For now, the 5% discount keeps Russian barrels competitive, ensuring that New Delhi sees value in defying Washington’s tariff threats. As one diplomat put it, “The more the pressure, the stronger the cooperation.”