How the US Indirectly Buys Russian Oil via Indian Refineries
While the United States has officially banned direct imports of Russian crude oil, American industries are still using oil that originally comes from Russia. This happens through a less obvious route: India. After buying large amounts of oil from Russia at discounted prices, Indian refineries process it into diesel, petrol, and jet fuel. These refined products are then sold across the world, including to the United States.
India’s Strategic Role in Global Oil Trade
In the last couple of years, India has emerged as one of the biggest buyers of Russian crude. Before the Russia-Ukraine conflict, India’s share of this oil was quite small. Today, this oil makes up around 40-45% of India’s total imports. Indian companies like Reliance Industries and Indian Oil Corporation refine this oil into products that are exported globally.
For India, this arrangement has been beneficial. Buying cheaper oil helps the country manage its domestic fuel prices while also creating opportunities to export refined products. For Western nations, including the US, India has become a crucial supplier of refined fuels, even though the crude oil being refined originally came from Russia.
How the Refining Process Circumvents Sanctions
The United States has banned direct purchases of oil from Russia. But when that oil is processed in countries like India and turned into fuels like diesel and jet fuel, it’s no longer labeled as Russian in origin. This creates a gap in the sanctions, allowing refined products to enter the US market without officially breaking any rules. From early 2023 until September, America received millions of barrels of such fuels through this indirect channel, keeping Russian supplies active in the global trade despite the sanctions in place.
Trump’s Criticism of India’s Oil Deals
President Donald Trump has been strongly critical of India’s role in global oil trade. He argues that by buying discounted crude from Moscow, refining it, and exporting the fuel to countries like the US, India is undermining Western sanctions. Trump has also threatened to increase tariffs on Indian exports if this practice doesn’t stop, hinting that such a move could impact India’s economy.
His main concern is that even when nations avoid direct oil deals with Russia, purchasing refined products that originate from there still ends up financially supporting the Kremlin. Trump believes the current sanctions are not enough and should be tightened to close off these backdoor channels of trade.
India’s Stand on the Matter
India, on the other hand, insists that it is not breaking any international rules. Officials say that they are buying crude under existing price caps and refining it for domestic consumption and export. Since they are not exporting crude oil itself, India believes it is well within its rights.
Buying oil from alternative sources would significantly raise India’s fuel costs. According to analysts, the country might end up paying an additional $9 to $11 billion each year if it stops importing from Russia and turns to other suppliers.
Conclusion
This scenario highlights the complex web of global energy trade. Even if direct transactions are blocked by sanctions, oil continues to enter supply chains after being processed in countries like India. While the US tries to cut down on its reliance on Russian energy, it still ends up using fuel that can be traced back to those sources. Fixing these loopholes isn’t simple because international trade and energy routes are so closely linked.
