India Warns US Over 100% Tariffs Over Russian Oil Purchase

Synopsis

India has alerted Washington that new American laws allowing tariffs of up to 100% on countries that purchase Russian oil could "adversely impact" bilateral ties. The warning comes in wake of the US House of Representatives passing a sanctions bill against Russia over Ukraine. India, the world's third biggest oil importer, said it would remain diversified in its energy sources, while local refiners are hoping for relief from the possible levy.

The new Delhi raises alarm over Sanctions Bill

India has issued a formal warning that new laws against buyers of Russian crude would have implications for India-U.S. relations. The new sanctions on buying Russian oil may have an effect on bilateral relations, hours after the United States took action to punish the buyers, India's foreign ministry said.

The impetus for this action was found in the actions of the congress. Top buyers of Russian oil will face tariffs of up to 100% under the sweeping sanctions bill that has been approved in final form by the US Congress and is waiting the president's signature. The Lindsey O. Graham Sanctioning Russia and Iran Act of 2026 passed by a vote of 262-159 in the House.

The content of the Bill

Legislation gives President Trump the authority to impose tariffs as high as 100 percent on countries, such as India, that rely heavily on Russian oil and gas in order to lower their reliance on Russia, as well as extend sanctions on Iran. India and China, the world's two biggest customers of Russian discounted crude, are on the crosshairs of the bill.

New Delhi's answer has been both assertive in its approach and to a lesser extent, a justification of the previous engagement. India had reiterated its continued commitment towards the energy security of the energy consumers of this country and stated that it would continue to buy energy from various sellers depending on market demand and supply situation.

The Indian government in Mumbai has spoken to its U.S. counterparts about potential impacts of the measures in recent months, according to India's foreign ministry.

The Ministry of External Affairs had "very clearly spelt out" its views on the issue to Washington, it said in a statement, reports said. India has discussed the matter with several interlocutors in these past few months," it said.

Refiners want to find a middle ground

The business implications are huge for India's energy industry. Indian refiners have already agreed on oil for September and October that includes Russian oil, and sources of the oil refinery said they would urge the government to discuss the matter with the US authorities, as oil prices will sharply rise if the new tariffs are imposed by Trump.

Refiners want the government to be more flexible in winding down deals and to offer them a new agreement to buy Russian oil at a lower rate.

Why the Discount Matters

India is the third largest importer of oil in the world, and if Russian volumes were to be replaced at the same discounts, it would be challenging; the discounts on Russian crude have been a significant economic benefit and if they are not maintained, it would be likely to lead to higher domestic crude oil prices and increased India's trade deficit. India also imports from various other sources such as Saudi Arabia, Iraq and UAE.

The time is considered important. The law comes at a time when India and the United States are actively trying to negotiate trade, and it is being viewed as more of a ploy than a policy goal.

Outlook

As the bill is expected to be signed by Trump, now the focus is on whether Washington allows any exceptions for Indian refiners during the wind down period or enforces the tariff on a full-fledged basis that will impact trade talks with India in the coming weeks