Russian oil red lines: The EU and US are about to push India too far
Recent remarks by former US President Donald Trump have further complicated this recalibration. Alongside a 25% tariff on Indian exports, imposed last week, Trump issued pointed warnings over India's sustained energy and defense trade with Russia, accusing New Delhi of indirectly supporting America's adversaries through continued oil purchases.
Trump went as far as to suggest that India and Russia could 'take their dead economies down together,' framing their economic engagement as contrary to US interests.
Trump's statements were not just emotional reactions – they were followed by a series of other statements from US officials. Secretary of State Marco Rubio on Friday claimed India's purchase of Russian oil is a 'point of irritation.'
'India has huge energy needs and that includes the ability to buy oil and coal and gas and things that it needs to power its economy like every country does, and it buys it from Russia, because Russian oil is sanctioned and cheap and – meaning they have to – in many cases, they're selling it under the global price because of the sanctions,' he stated. 'And that – unfortunately that is helping to sustain the Russian war effort. So it is most certainly a point of irritation in our relationship with India – not the only point of irritation.'
On Sunday, a top aide to President Donald Trump accused India of financing Russia's war in Ukraine by buying oil from Moscow. 'What he [Trump] said very clearly is that it is not acceptable for India to continue financing this war by purchasing the oil from Russia,' said Stephen Miller, deputy chief of staff at the White House and one of the US president's most influential aides. 'People will be shocked to learn that India is basically tied with China in purchasing Russian oil. That's an astonishing fact,' Miller said on Fox News.
This marks a significant hardening of tone, signalling that bipartisan pressure on India's Russia policy may persist regardless of the administration in power.
The Indian government issued a stern response, saying Delhi would keep purchasing oil from Moscow if it is in line with national interests. Its foreign ministry stated that country's energy purchases are guided by market dynamics and national interests. 'The government is committed to prioritizing the welfare of Indian consumers. Our energy purchases will be based on price, availability and market conditions,' the statement read.
Despite Trump's claims that India had stopped buying Russian oil after his threats, the Indian government said it is not aware of any pauses in imports. People in the oil and gas industry have confirmed that the government has not issued any officials requests to refiners to stop purchasing Russian oil.
As global energy flows are increasingly weaponized, India's path is becoming tougher, but also more clearly defined. This is no longer merely a question of compliance with sanctions; it is about resisting the politicization of trade and asserting agency in a fragmented global order. The message to the West at large: India's energy decisions will not be dictated by external red lines.
India's response is not retreat, but recalibration, through diversification, industrial pivoting, and legal safeguards. It signals the emergence of a new energy diplomacy: one that is agile, layered, and unapologetically sovereign.
EU pressure
A change in US rhetoric against India came days after theEuropean Union unveiled its 18th sanctions package targeting refined fuels processed from Russian crude. By imposing curbs on the import of diesel and other fuels refined from discounted Russian oil, the EU has drawn India's biggest private refiners, Nayara Energy and Reliance Industries Ltd. (RIL), into a geopolitical confrontation they had largely navigated with strategic finesse since 2022.
At the core of the EU's sanctions is a new strategy of tracking the origin of crude, even after it has been transformed into refined products. In other words, Indian diesel or jet fuel produced from Russian Urals crude will now be treated as Russian in origin, regardless of where it's refined. This has immediate implications for Nayara Energy's Vadinar refinery, the second largest in India, and also forReliance, which operates the world's largest refining complex at Jamnagar and has occasionally purchased Russian barrels to take advantage of significant discounts.
The EU has gone further. It has lowered the price cap on seaborne Russian crude from $60 to $47.60 per barrel, effective from September 3, 2025. In practice, this severely limits Indian refiners' ability to secure Urals crude at prices that generate high margins, formerly in the $15–20 per barrel range. This arbitrage had made Indian products highly competitive in the European market. With Europe now closed off and refiners forced to reroute cargoes to regions with lower demand and pricing power, expected margins could shrink to $8–12, with an additional $1–2 per barrel in compliance costs.
India's reaction was swift and unequivocal. The Ministry of External Affairs condemned the move as 'unilateral and extraterritorial,' rejecting the notion that its energy decisions should be hostage to the EU's secondary sanctions logic.
Foreign Secretary Vikram Misri underlined that India's energy security remained 'non-negotiable', a principle India would not abandon merely to appease Western preferences. Even Nayara Energy, 49.13% owned by Russia's Rosneft and long seen as vulnerable, broke its usual silence to denounce the sanctions as unjustified, while considering legal remedies through international arbitration mechanisms.
Targeting Nayara Energy recently saw a leadership change, with CEO Alessandro des Dorides stepping down amid the evolving impact of EU sanctions and operational uncertainty. This was not just symbolic. A BP-chartered tanker, the Talara, left Nayara's port without loading fuel after the sanctions were announced. This suggests that EU enforcement will be aggressive and, potentially, that companies with European exposure will become increasingly wary of doing business with Indian refiners tied to Russian feedstock. Nayara may not be the last to face such pressure. Reliance, despite its diverse portfolio, is already re-evaluating its sourcing strategies in anticipation of tighter scrutiny.
The financial stakes are staggering. India's fuel exports to Europe, which peaked at $19.2 billion in FY24, have already dropped by 27% to $15 billion in FY25. With the EU's latest restrictions now fully operational, analysts estimate that India could lose up to $5 billion annually, depending on the rigor of enforcement and the ability of refiners to find alternate buyers in Asia or Africa. The sheer scale of these losses would not only erode refining margins but also squeeze India's current account buffers, potentially complicating its macroeconomic stability.
Redrawing India's Energy Map
India isn't backing down. Instead, it is executing a quiet but deliberate recalibration of its energy strategy. Leading Indian refiners are ramping up imports from Iraq, Nigeria, and Saudi Arabia, while cautiously exploring longer-term deals with US crude suppliers, despite those barrels being less competitively priced than discounted Russian Urals. The objective is strategic: to avoid overdependence on any single geopolitical supplier while safeguarding energy security on India's own terms.
For Reliance Industries, the pivot is even deeper. Already investing $10–15 billion in its ambitious crude-to-chemicals (C2C) initiative, the company is insulating itself from the volatility of fuel exports by focusing on petrochemicals and specialty materials with more stable margins and global demand. This rebalancing is likely to accelerate in the wake of the EU sanctions, giving Reliance a strategic hedge against trade weaponization.
While Reliance charts an innovation-led pivot, Nayara remains entangled in geopolitical risk.Given Rosneft's equity stake and its exposure to sanctions, any restructuring will need careful legal engineering. The company is reportedly exploring the creation of special-purpose vehicles or divestment strategies to insulate its operations.
This standoff isn't just about oil, it's about sovereignty. India, having withstood Western pressure on Russian oil since 2022, now sees the EU's sanctions as a strategic red line. The real risk lies not only in lost trade, but in legitimizing extraterritorial controls that erode the Global South's right to independent economic choices.
While the EU claims it's closing loopholes, India sees clear double standards. European nations still import Russian LNG and rely on intermediaries, yet penalize India for refining crude.
The era of quiet compromise is over. In its place, a more assertive India is stepping forward, redefining its energy calculus, managing geopolitical headwinds, and defending its autonomy with both pragmatism and resolve.
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