Trump’s India barrage won’t hurt Putin, but risks oil market stability

Vandana Hari is founder of Vanda Insights, a Singapore-based global energy market intelligence provider.

President Donald Trump’s latest tirade against India over its purchases of Russian crude and threats to penalize it with steep “secondary tariffs” on goods exports to the U.S. not only defies all standards of fairness and rationality, but also reveals a troubling failure to grasp the complexities of global oil markets.That threat turned into action on August 6, when Trump announced 25% additional tariff on Indian exports, taking the total for the country to 50%.

Trump’s amped-up criticism, as he struggles to coerce Russian President Vladimir Putin into agreeing a ceasefire in Ukraine, is a replay of familiar arguments. These have been regularly invoked by Western European leaders over the past three years, accusing India of funding the Russian war machine. But repeating a flawed narrative does not make it credible or justified — especially when it is riddled with misinformation, rooted in shaky logic, and compromised by glaring double standards.

When the Group of Seven led by the U.S., alongside the European Union, imposed sweeping financial sanctions on Russia and banned imports of its oil and other commodities in response to the February 2022 invasion of Ukraine, the Western alliance risked triggering a global oil supply shock and price spikes.

At that time, Russia was exporting nearly 7.5 million barrels of crude and refined products daily, equivalent to about 7.5% of world consumption. Nearly 4 million barrels of that volume were going to the EU, flows that were almost completely phased out within a year of the Ukraine invasion.

To avoid a global supply crunch, the Western alliance needed non-sanctioning countries to absorb the displaced Russian oil. China, a long-time buyer of Russian crude, gradually stepped up its purchases, with seaborne imports in 2024 almost doubling from about 715,000 barrels per day in 2021. But it was India’s pivot that stood out dramatically and served as a bulwark of market stability: From near-zero imports pre-2021, its purchases of Russian crude surged to about 1.64 million bpd in 2024, accounting for about 35% of its total crude imports.

This increased uptake by China and India — fully visible to the Western alliance — served two vital functions. It freed up volume from other major exporters in the Middle East and elsewhere for EU refiners whose supply options had shrunk dramatically. And it helped cool prices. As Russian oil flows reoriented, benchmark Brent crude prices fell from a peak of nearly $128 per barrel in early March 2022 to $80 levels by December of that year.

Trump’s trope that U.S. shale producers could seamlessly fill in shortfall from reduced Russian supply is misleading. While U.S. crude output is at a record high of around 13.5 million bpd, signs point to an imminent plateau, with drilling and fracking activity in the shale basins in a sustained decline and producers trimming capital spending. Moreover, nearly 91% of U.S. crude exports are light grades — a poor substitute for Russia’s largely medium and heavy ones, which yield different refined products.

It is also unfair to single out India as a bad actor when at least half a dozen other countries, including China and Turkey, are regular buyers of Russian crude, whose overseas flows have averaged around 4.2 million bpd so far this year.

Indian Prime Minister Narendra Modi, left, and U.S. President Donald Trump met in February at the White House in Washington, D.C., amid a positive atmosphere.   © Reuters

In addition, India, China and Turkey, along with a handful of other buyers, collectively absorb about 2.4 million bpd of Russian refined product exports. A sudden disruption of these flows could severely destabilize a global market with constrained refined capacity.

Adding to the irony, Western leaders including Trump gloss over the fact that the EU countries continue to import tens of billions of dollars’ worth of liquefied natural gas, fertilizers, metals, chemicals and even nuclear materials from Russia. Aren’t those revenues flowing into the same Russian coffers?

Trump has also denounced India for exporting refined products made from Russian crude to Europe, a refrain that may sound forceful but falls short on logic and overlooks the intricacies of global fuel trade. Indian refiners are well within their rights to sell to any overseas buyers. If Europe wants to avoid Russian-origin molecules, the onus is on European buyers to devise ways to verify and enforce that — assuming it is technically and practically feasible.

The U.S. president’s claim that India sells Russian oil “on the open market for big profits” is also baseless. India does not resell Russian crude; assuming he meant refined products, it is true that discounted Russian crude lowers feedstock costs, but Indian refiners’ margins remain well below those of U.S. Gulf Coast peers. Most of India’s fuel is consumed domestically. Its overall refined product exports only crept up from around 1.28 million bpd in the fiscal year ended March 2022 to 1.33 million bpd in the year ended March 2025, according to official data.

So, what explains Trump’s outburst against India? It may have more to do with New Delhi’s unwillingness to compromise on core issues — especially in the agriculture sector– during failed bilateral trade negotiations.

Now that the tariffs are official, the risk of escalation and broader oil market disruption is very real.

With a meeting with Putin on the cards, Trump must channel his efforts into brokering a diplomatic solution to the Ukraine crisis—without turning India or other nations into pawns in a dangerous game of energy brinkmanship.

The article appeared in asia.nikkei