India to Halt Russian Oil Imports Amid New US Trade Deal
In a significant geopolitical development, U.S. President Donald Trump announced on February 2, 2026, that India has agreed to stop purchasing Russian oil as part of a new trade agreement with the United States. The deal includes reducing tariffs on Indian goods from 25% to 18%, while India will eliminate tariffs on U.S. products. This strategic move is aimed at curtailing Russia’s economic influence and potentially contributing to the resolution of the ongoing conflict in Ukraine.
Details of the Trade Agreement
According to sources, the U.S.-India trade agreement involves India committing to purchase over $500 billion worth of American goods, covering sectors such as energy, technology, agriculture, and coal. This pivot is seen as part of India’s broader strategy to diversify its trade partnerships following the recent India–EU Free Trade Agreement signed on January 27, 2026.
Current Status of Russian Oil Imports
Despite the announcement, data indicates that India has not yet ceased importing Russian oil. In January 2026, Indian refiners imported approximately 1.18 million barrels per day (bpd) of Russian crude oil, representing a 30% year-on-year decrease. However, this figure shows only a slight reduction from December 2025’s imports. Major Indian oil companies like Indian Oil Corp, Nayara Energy, and BPCL continue to engage with Russian suppliers, benefiting from discounts that have risen to $5–6 per barrel.
Market Reactions and Strategic Implications
The market has responded cautiously to the announcement, with analysts emphasizing the economic viability of Russian oil for India. Although the country is increasing its crude intake from Middle Eastern suppliers such as Iraq and Saudi Arabia, Russia remains a competitive option due to favorable pricing and existing supply infrastructure.
Sumit Ritolia, Lead Research Analyst at Kpler, notes that India’s current import behavior reflects a cautious shift towards compliance-safe sources while maintaining Russian crude imports for economic reasons. Meanwhile, Kotak Institutional Equities highlights that the financial impact of shifting away from Russian crude may be modest, with alternative sources carrying a $4.7 per barrel premium.
Outlook and Further Developments
While President Trump’s announcement marks a significant political commitment, the practical implementation of ceasing Russian oil imports by India remains to be seen. The Indian government has yet to officially confirm the cessation, and the transition towards alternative energy suppliers is an ongoing process.
Market observers and stakeholders will closely monitor upcoming developments, including potential confirmations from the Indian government, changes in trade flow data, and fluctuations in global oil markets. The geopolitical ramifications of this trade deal and India’s energy policy adjustments will continue to unfold in the coming months.
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