Russia economy meltdown as 3rd largest crude customer to stop buying oil

Several major Indian state-run oil companies have reportedly paused their purchases of Russian crude oil following a sharp warning from former U.S. President Donald Trump. According to sources familiar with procurement plans, firms such as Indian Oil Corporation, Bharat Petroleum, Hindustan Petroleum, and Mangalore Refinery and Petrochemicals have not placed new orders for Russian crude in recent days.

India is the world’s third-largest oil importer and has become a significant buyer of discounted Russian oil since global sanctions began following the war in Ukraine. However, Trump recently stated that countries continuing to purchase Russian energy may face severe consequences, including a 25% tariff on all U.S. imports from those nations.

This message appears to have prompted Indian refiners to shift course. Instead of sourcing oil from Russia, these companies are now turning to alternative suppliers in the spot market, with Middle Eastern grades like Abu Dhabi’s Murban crude and some West African oil reportedly being considered.

While private Indian refiners such as Reliance Industries and Nayara Energy continue to import Russian oil, the state-run companies—who control more than 60% of the country’s refining capacity—seem to be taking Trump’s warnings seriously.

In a post on social media earlier this month, Trump said India would face “a penalty” for continuing to buy Russian crude, in addition to already-announced tariffs. The nature of that penalty remains unclear, and refiners are now looking to the Indian government for further guidance.

As R. Ramachandran, a former executive at Bharat Petroleum, told Bloomberg, “There is plenty of crude available in the market, it’s just that India will have to pay more.” He added that it could take several months for supply chains to fully adjust.

Indian refiners are also navigating another challenge: a proposed European Union restriction on the export of diesel made from Russian crude. That development, coupled with U.S. pressure, is making the continued reliance on Russian oil increasingly difficult for India’s energy sector.

So far, neither the state-owned companies nor India’s Ministry of Petroleum and Natural Gas has commented publicly on the shift.