US President Donald Trump has claimed that India may soon stop importing oil from Russia. However, experts believe that India will never do so. India is benefiting greatly from purchasing oil from Russia. Therefore, India would not want to shoot itself in the foot by stopping this purchase.

Washington: Western sanctions imposed on Russia following its invasion of Ukraine have altered global energy flows. India and China have emerged as major buyers of Russian oil. Meanwhile, US President Donald Trump has said that Prime Minister Narendra Modi told him that India may soon stop purchasing oil from Russia. However, many experts have rejected Trump's claim. They say that the question is not who India and China will buy oil from, but in what currency they will pay.

Preparations to pay for Russian oil in Chinese currency

US President Donald Trump is irritated with India over its purchase of Russian oil. Consequently, he has imposed steep tariffs on Indian exports. Despite this, India has repeatedly rejected Trump's demands to stop purchasing oil from Russia. However, these US tariffs have warmed relations between India and China, which the US considers its biggest enemy. Now, Indian traders are reportedly requesting the country's state-owned refineries to pay for Russian oil in Chinese yuan. If this happens, it will be a further blow to the US.

US tariffs improve India-China relations

There are concerns in the US that Trump's moves could encourage India to deepen its cooperation with Russia and China in various fields. Aiming to prevent such an outcome, a group of 19 US Congress members recently urged Trump to lift tariffs on India. Trump's moves have already strained economic relations between the US and China and also helped Beijing expand its influence in Eurasia.

Will Trump lift tariffs if he doesn't buy Russian oil?

At the moment, there are no signs that Trump will change his stance and stop pressuring India to end energy cooperation with Russia. But even if New Delhi were to make some politically goodwill move to appease Washington and stop purchasing Russian raw materials—which is unlikely—there is no guarantee that the US will reduce tariffs.

India responded to Trump in his own language.
Fully aware of Trump's unpredictable policies, India has begun adopting his strategy of making impossible demands. In exchange for ending its energy ties with Russia, India has demanded permission to purchase oil from Iran and Venezuela, both of which are under US sanctions. This is believed to be part of a deliberate move by India to demonstrate to the US administration that it currently has no other option but Russia.

Will India stop buying oil from Russia?

From India's perspective, halting such purchases would be like shooting oneself in the foot. Russian supplies account for nearly a third of India's total crude oil, and New Delhi has saved at least US$12.6 billion by purchasing Russian oil over the past three years. India is unlikely to follow the lead of European countries and abandon relatively cheap Russian energy to pay more for oil and gas from other producers.

Stopping Russian oil purchases will hurt India.

Thus, unwilling to risk potential damage to the Indian economy—including an estimated US$10 billion increase in oil import costs if Russian supplies cease—officials have repeatedly stated that they will continue to buy Russian oil regardless of US pressure. Therefore, it is no surprise that Indian refiners will increase oil imports from Russia in the coming months.

European countries may increase India's tension

But the problem for New Delhi is that European countries may continue to blockade Russian proxy fleets carrying oil to Indian refineries, disrupting the country's oil supply chain. More importantly, if India's purchase of Russian oil becomes a long-term practice, it could hurt the rupee, which fell to an all-time low against the yuan in August.

Russia is improving India-China relations

In July 2023, Indian refiners will begin paying for some Russian oil imports in yuan for the first time. However, as of October, Indian traders have refused to continue doing so. As India and China are now trying to improve relations, New Delhi's move signals closer ties with its giant neighbor and further distances itself from Washington.