Washington’s Sanctions Push India Toward Scaling Back Russian Oil, Opening Path for Trade Deal

India is preparing to make a significant reduction in its imports of Russian oil to comply with new U.S. sanctions targeting Russia’s two largest producers, Lukoil and Rosneft, according to industry sources. The move could ease one of the main obstacles in India’s trade negotiations with Washington, as New Delhi faces steep 50% tariffs on its exports to the U.S., half of which are linked to its purchases of Russian crude. In exchange for scaling back imports from Moscow, India hopes to secure a deal that would lower those tariffs to levels similar to those applied to other Asian economies.

Since Russia’s full-scale invasion of Ukraine in 2022, India has become the top buyer of discounted Russian seaborne crude, importing around 1.7 million barrels per day in the first nine months of this year. However, Washington’s latest sanctions have prompted a broad reassessment within India’s energy sector. Private refiner Reliance Industries, the country’s largest importer of Russian oil, is expected to substantially cut or completely halt such purchases, including its major long-term supply agreement with Rosneft. A company spokesperson confirmed that Reliance’s procurement strategy is being “recalibrated” and will remain fully in line with government directives.

State-owned refiners such as Indian Oil Corporation, Bharat Petroleum, and Hindustan Petroleum are also reviewing their documentation and supply chains to ensure that no oil sourced directly from the sanctioned Russian firms enters their imports. Officials familiar with the matter said the companies are taking precautions to comply with the sanctions, though neither the oil ministry nor the refiners provided immediate public comment. One refinery source noted that while imports from Russia would be drastically reduced, some limited flows might continue indirectly through intermediaries.

The impact of the new U.S. restrictions, the first of President Donald Trump’s second term targeting Moscow over the war in Ukraine, will depend heavily on financial institutions. “It all depends on banks,” said one refinery official, explaining that payment processing would determine whether any Russian barrels could still be purchased. The U.S. Treasury has given companies until November 21 to wind down existing transactions with the sanctioned producers.

Analysts say Washington’s enforcement measures mark a sharper turn in Trump’s stance toward President Vladimir Putin. “If the administration follows through, refiners that want to keep access to U.S. capital markets will likely abandon Russian barrels,” wrote RBC Capital’s Helima Croft.

Reliance, owned by billionaire Mukesh Ambani, operates the world’s largest refining complex in Jamnagar, Gujarat, and has a deal to buy about 500,000 barrels per day from Rosneft. The company also purchases Russian crude through intermediaries but has recently shifted toward buying spot cargoes from the Middle East and Brazil to offset potential shortfalls. Traders said the company was active in the market this week searching for alternative supplies.

Even before the new sanctions, Reliance had been weighing an end to Russian imports for one of its export-oriented refineries, anticipating an upcoming European Union ban on refined products made from Russian crude that will take effect in January. Meanwhile, Nayara Energy—partly owned by Rosneft—continues to source some of its crude from Russia but has not publicly commented on whether it plans to adjust those volumes.

Industry sources added that state refiners typically avoid direct purchases from Rosneft and Lukoil, relying instead on intermediaries for any Russian-origin oil. As markets absorbed news of the sanctions and the potential reduction in Indian demand, Brent crude futures rose more than 3% on Thursday, reflecting heightened concerns about global supply shifts.