A trade agreement reached with President Trump was intended to halt India's imports of Russian oil. However, the conflict in the Middle East has disrupted alternative supplies. In 2024, a Russian oil tanker navigated the Bosporus Strait, one of the routes for exporting oil to international buyers. A red and blue tanker is visible in the foreground, moving along the busy shipping lane against the backdrop of Istanbul's skyline and a suspension bridge.

Following President Trump's decision last summer to penalize India for purchasing Russian crude, Indian officials endured six months of difficult negotiations over Trump's demands. The U.S. imposed sanctions on some Indian refineries and levied punitive 50% tariffs on Indian goods to pressure India into reducing revenue for what he termed Moscow's "war machine."

On Thursday, U.S. Treasury Secretary Scott Bessent stated on social media that the Trump administration would grant India a limited 30-day exemption, permitting the purchase of sanctioned Russian oil currently stranded at sea, to ensure the "continued flow of oil into global markets."

After Trump allied with Israel to wage war on Iran, India found it nearly impossible to obtain oil from its alternative suppliers, most of which are located in the Persian Gulf. Supplies from the region have been cut off since the conflict erupted and escalated last Saturday. With a growing economy that relies on imports for 90% of its fuel, India now has few alternatives. Russia has clearly emerged as the solution.

Sumit Ritolia, a research analyst at international shipping tracker Kpler, anticipated this shift, noting that India had never completely halted Russian oil supplies. Tankers loading from Russia take nearly a month to reach Indian ports, and shipments loaded before the trade agreement was announced were still in transit.

On Friday, Ritolia wrote, "This exemption effectively gives the green light." Russia's oil production is insufficient to fully compensate for the trapped supplies from the Persian Gulf, but it now has every reason to increase output and should be able to command higher prices.

Rajiv Lala, an energy analyst at S&P Global who tracks Indian state-owned oil companies, stated that India's recent experience in purchasing and processing seaborne Russian crude demonstrates that it can function without heavy reliance on Gulf oil. India had begun reducing Russian oil purchases in recent months but is now fully capable of resuming previous cooperation.

"If Gulf supplies remain shut off long-term, India is in a more favorable position than other nations to restart the Russian supply chain, while others would need to exert greater effort," Lala said.

Indian refineries are already equipped to process Russian crude, and their shipping and insurance partners for Russian deals remain on standby. India can rapidly increase its imports of Russian oil.

Just four weeks ago, the trade war between India and the U.S. concluded. According to the official U.S. statement, India committed in the agreement to stop buying Russian oil.

This commitment meant Indian buyers would forego the discounted Russian oil that had saved them billions of dollars since the outbreak of the Russia-Ukraine conflict. India had been purchasing Russian crude at low prices, processing it, and exporting refined products to Europe, which had significantly reduced its own trade with Russia.

Merely a week later, the U.S. Supreme Court invalidated the tariff policy Trump used to pressure India into signing the agreement. The Trump administration still possesses other means to compel India to reduce Russian oil purchases, such as threatening penalties for companies dealing with major Indian oil firms or finding new legal grounds to impose tariffs.

Currently, India has almost no other oil sources available. Its primary suppliers were previously Iraq and Saudi Arabia, with Kuwait and Oman expected to cover the remaining shortfall. However, the Strait of Hormuz, a narrow waterway near Iran's southern border that serves as the main passage for Gulf energy exports, is nearly closed due to drone and missile attacks.

In contrast, Russian oil can reach India via multiple routes: from western Russian ports through the Mediterranean, Suez Canal, and Red Sea to India's west coast; some oil is also shipped from Russia's Far East, though those supplies may be redirected to East Asian buyers also seeking alternatives to Persian Gulf oil.

Russian tankers take longer to reach India than Gulf tankers, which require less than a week. However, significant volumes of Russian oil are already waiting on tankers in international waters—Ritolia from Kpler estimates that over 30 million barrels of crude are stranded in the Indian Ocean, enough to meet India's total demand for six days, with more supplies en route.

Lala from S&P Global Energy pointed out that in recent years, Indian oil companies have become accustomed to purchasing crude directly without investing in exploration and production projects in the Gulf or other regions. "The thinking at the time was: 'Keep calm and just keep buying,'" he said. But with both Russian and Gulf supplies now constrained, that model may need to change.