U.S. President Donald Trump and Indian Prime Minister Narendra Modi announced a trade agreement on Monday, which includes a halt to Indian oil purchases from Russia.
In exchange for lowering trade barriers in India and halting the purchase of oil from Russia, the United States has agreed to lower tariffs on Indian goods from 50% to 18%. India will likely consider buying oil from the U.S. or Venezuela.
The United States is aiming to curb Russia’s oil revenues to make it difficult to fund its war. India became the top consumer of discounted Russian seaborne crude oil after the outbreak of the war in Ukraine in 2022. This generated backlash from Western states that had imposed sanctions on Russia’s energy sector.
“We spoke about many things, including Trade, and ending the War with Russia and Ukraine,” Trump commented on his discussion with Modi. “He agreed to stop buying Russian Oil, and to buy much more from the United States and, potentially, Venezuela.”
Modi posted on social media about his delight regarding the reduced tariff; however, he has not commented on the halt on Russian oil purchases.
Wind-Down Period Necessary for Indian Refiners
According to two refining sources, Indian refiners will need a wind-down period to complete existing Russian oil deals before the imports can be halted. So far, the Indian government has not ordered these refineries to stop imports.
Indian companies have booked cargoes loading in February that will arrive in March, so a wind-down period is necessary to fulfil existing commitments, the sources said. They have asked to remain anonymous as they were not authorised to speak with the media.
According to a third source, India plans to gradually cut back on Russian oil imports because a complete halt could hit Russia-backed Indian refiner Nayara Energy’s 400,000-barrel-per-day refinery. They added that Nayara’s Russian oil imports will be negligible in April because the refinery shuts down for over a month for maintenance starting on April 10th.
Nayar is fully reliant on Russian imports after Iraq’s Somo and Saudi Aramco pulled back due to payment difficulties following sanctions imposed by the European Union on the refiner back in July 2025.
India Diversifies Oil Sources
Last week, Reuters reported that Washington said India could resume Venezuelan oil purchases to help replace imports of Russian oil. Trump also reiterated on Saturday that India will now be buying oil from Venezuela.
Indian Oil Minister Hardeep Singh Puri stated last month that India will be diversifying its crude oil sources as the Russian imports fall.
In December, India’s imports of Russian oil reached their lowest level in two years, as reported by data from trade sources. Meanwhile, OPEC’s share of Indian imports rose to an 11-month high.
Indian refiners have alternated to buying more oil from Middle Eastern, African and South American countries as the imports of Russian oil have been scaling back, following discussion with the government about accelerating the U.S.-India trade deal, sources said in January.
(With inputs from Reuters)
