India is caught in a tough dilemma after President Trump’s proposal to impose a 25% tariff on Indian imports in response to its purchases of discounted Russian crude. The dilemma boils down to choosing between safeguarding $87 billion in U.S. export revenue or preserving billions in savings from cheaper oil.
India has so far signalled defiance, prioritizing access to affordable Russian crude to keep its exports globally competitive. This oil saving isn’t trivial: according to State Bank of India data cited in The Economic Times, India could face a $9 billion increase in its oil import bill this year, and another $11 billion next year, if cheaper Russian oil is dropped.
ING analyst Warren Patterson captured the stakes succinctly: “Would you risk $87 billion of exports to save only a few billion in oil discounts?” New Delhi’s response suggests it’s unwilling to be dictated where to source its oil—highlighting that costlier alternatives would crimp both its energy security and export pricing.
If India complies, the global market would lose about 1.7 million barrels per day—fueling higher oil prices, ironically working against Trump’s preference for lower prices. In such a scenario, Indian refiners may revert to Middle Eastern crude, as before, rather than scramble for U.S. supply.
Total disruption could exceed 2 million bpd if additional nations like Turkey are pulled into secondary U.S. sanctions. While OPEC+ plans to fill the gap, capacity issues remain. Losing discounted Russian oil in favor of costlier sources paints a bullish—though politically contentious—outlook for oil, and would strain India’s export competitiveness if American buyers seek cheaper alternatives.
