India's Russian crude lifeline faces fresh US tariff threat

India's reliance on discounted Russian crude to curb its import bill could come under renewed pressure after the US Senate overwhelmingly passed the Lindsey O. Graham Sanctioning Russia Act of 2026, a sweeping sanctions package that authorises President Donald Trump to impose tariffs on countries that continue purchasing significant volumes of Russian oil and gas. The bill, which passed the Senate 86-11, now awaits consideration in the House of Representatives.

While the legislation is not yet law, it marks a major escalation in Washington's efforts to curb Moscow's energy revenues by targeting not just Russia but also major buyers of its crude, including India and China. Under Section 113 of the bill, the President would have the authority to impose tariffs of up to 100% on imports from countries that continue purchasing Russian-origin crude oil or natural gas after the law takes effect, although the revised bill gives the administration discretion to reduce or waive tariffs under certain conditions.

India's Russian oil dependence has surged

The proposed legislation comes at a time when Russia has become India's largest crude oil supplier by a wide margin.

Since the outbreak of the Ukraine war in 2022, Indian refiners have sharply increased purchases of discounted Russian crude, transforming the country's import basket. Russia, which accounted for less than 2% of India's crude imports before the war, now supplies more than half of India's imported crude in some recent months. Russian imports have climbed to around 2.6-2.7 million barrels per day, making India one of Moscow's largest energy customers.

The remainder of India's crude imports is sourced from Iraq, Saudi Arabia, the UAE, the United States, Kuwait, Venezuela and several African producers, reflecting New Delhi's strategy of diversifying supply while taking advantage of competitive pricing.

Temporary reduction, followed by a sharp rebound

India's dependence on Russian crude has not been without political pressure.

Last year, President Trump criticised India for continuing to buy Russian oil and announced additional tariffs linked to New Delhi's purchases of Russian energy. Indian refiners subsequently reduced Russian crude purchases for a brief period as trade negotiations gathered pace and sanctions uncertainty increased. However, imports rebounded strongly as discounted Russian barrels remained commercially attractive and concerns over West Asia supply disruptions resurfaced.

The resurgence in imports means India could once again find itself at the centre of Washington's sanctions strategy if the legislation is enacted.

Balancing energy security and exports

For India, the issue extends well beyond crude oil.

The country imports nearly 90% of the crude oil it consumes, making affordable energy supplies critical for controlling inflation and supporting economic growth. Russian crude has allowed Indian refiners to lower feedstock costs while maintaining strong refining margins.

However, the United States is also India's largest export market. Any tariffs on Indian exports could affect sectors ranging from engineering goods and textiles to auto components, chemicals and gems and jewellery, potentially complicating bilateral trade ties.

Analysts note that the revised Senate bill is less stringent than earlier proposals, which had envisaged tariffs as high as 500% on countries buying Russian energy. The current version caps the tariff authority at 100%, focuses on the largest buyers of Russian crude and allows the President to reduce or waive duties if countries cut purchases or if doing so is deemed to be in the US national interest.