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Source: Yahoo Finance

India’s Reliance on Russian Oil

India’s reliance on Russian oil is rooted in both economics and necessity. As the world’s third-largest consumer of crude oil and with a population exceeding 1.4 billion, India requires a stable and affordable energy supply to support its expanding economy. Russian crude oil accounts for around 36 % of India’s oil imports, making Moscow its top supplier.

Following Western sanctions on Russian energy, New Delhi began buying heavily discounted Russian oil, which it refines and often re-exports to other countries, including the US and Europe, at a profit. Indian officials defend this practice as a purely economic decision, noting that replacing Russian supply overnight is nearly impossible and that other major economies also maintain some trade with Russia.

Rupee’s Sharp Reaction

The Indian rupee ended lower for a fifth straight week, marking its steepest consecutive weekly decline in six months as these tensions escalated. The currency closed slightly higher at 87.66 against the US dollar on Friday, up slightly from Thursday’s 87.7025 and touching an intraday high of 87.5350. *

Early gains were supported by dollar positions in the offshore forwards markets, but persistent dollar demand from oil importers pushed the USD/INR pair higher later in the session. Over the past five weeks, the rupee has fallen nearly 3%, with the latest drop fueled by India’s position among the hardest-hit countries in Trump’s trade offensive.*

The Reserve Bank of India has been intervening almost daily in the spot market to reduce volatility, a strategy that contributed to the $9 billion decline in foreign exchange reserves in the week ended August 1. Market participants note that while fears of a record low persist, there remains hope that tariffs could be eased in the coming weeks, potentially triggering a relief rally in Indian assets.

Trump’s Tariff Threats

Trump has taken a hard line. In a recent announcement, he confirmed a 25 % tariff on Indian goods set to take effect immediately, along with an additional 25 % tariff later this month, specifically targeting India’s continued imports of Russian oil and gas. Combined, these duties would bring total tariffs on Indian exports to 50 percent, among the highest the US imposes on any trading partner.

On social media, Trump accused India of buying massive amounts of Russian oil and reselling it for big profits, adding that such actions show disregard for the lives lost in Ukraine. The White House sees the tariffs as a way to pressure Prime Minister Narendra Modi into reducing ties with Moscow, but India insists the measures are unjustified and warns they could harm global energy stability by driving oil prices higher.

* Past performance is no guarantee of future results.

purchases indirectly support Moscow’s war in Ukraine. In reaction, the Indian rupee has posted its sharpest consecutive weekly decline in six months, fueling investor concerns. The Reserve Bank of India has stepped in to stabilize the currency. Still, its interventions have already contributed to a drop of more than $9 billion in foreign exchange reserves over the past week.