India: "Purchasing Iranian Crude Must Be Permitted to Reduce Russian Oil Imports"

PM Modi: "We Will No Longer Rely on Other Nations"

Indian Prime Minister Modi (left) and U.S. President Trump [Photo courtesy of Reuters/Yonhap News. Resale and database usage prohibited.]

An Indian delegation that recently visited the U.S. to resume stalled trade negotiations argued that for India to reduce its imports of Russian crude oil, it must be permitted to purchase oil from Iran and Venezuela, which are currently under sanctions.

According to Bloomberg on the 26th (local time), the Indian delegation visiting the U.S. for trade talks this week raised the issue of Russian oil imports—a major sticking point in current bilateral negotiations—during closed-door meetings with U.S. officials.

An anonymous source familiar with the discussions told Bloomberg that "Indian officials requested that their domestic refineries be allowed to purchase crude from sanctioned nations Iran and Venezuela if they are to significantly reduce their dependence on Russian oil."

The Indian delegation reportedly emphasized to the U.S. that a simultaneous cut-off in oil supplies from major producers including Russia, Iran, and Venezuela could lead to a sharp spike in global oil prices.

India ceased imports of Iranian crude in 2019, and as the U.S. tightened sanctions, Reliance Industries, India's largest private refinery, also stopped purchasing Venezuelan oil starting this year.

Bloomberg noted that while Indian refineries could increase their purchases from the Middle East, the costs would be significantly higher.

In July, Indian refineries purchased Russian crude at an average of $68.90 per barrel, while Saudi Arabian crude cost $77.50 and U.S. crude cost $74.20.

Prime Minister Narendra Modi stated at the opening ceremony of an international trade fair in the northern state of Uttar Pradesh the previous day that India is "strengthening its long-standing and proven cooperative relationship with Russia."

He further emphasized, "In a changing world, the more a country relies on others, the more its growth potential is put at risk," adding, "India will no longer depend on other nations."

The U.S. previously imposed a 26% reciprocal tariff on India in April. Since then, the two countries have held five rounds of negotiations but have failed to reach an agreement, largely due to disagreements over reducing tariffs on U.S. agricultural products and India’s continued purchase of Russian oil.

The U.S. has argued that India's purchases of Russian oil are essentially financing the war in Ukraine.

India is the world's third-largest oil importer, following China and the U.S., and sources 38% of its total crude oil from Russia.

Ultimately, last month, the U.S. imposed a 25% reciprocal tariff—1% lower than before—while adding a new 25% retaliatory tariff on India due to its oil dealings with Russia.

The 50% total tariff rate is among the highest the U.S. has ever imposed on a global trading partner, equal to the tariffs levied against Brazil. Yonhap News