When India and the USA introduced a breakthrough commerce settlement this week after months of tense negotiations, tariffs dominated the headlines. However beneath the numbers and celebrations lay one other subject that’s way more political than business – oil — who India buys it from, and who it’s anticipated to purchase from sooner or later.US President Donald Trump claimed that as a part of the settlement, India had agreed to halt purchases of Russian crude and would as a substitute purchase oil from the USA and doubtlessly Venezuela. India has not publicly confirmed any such dedication, and Russia has stated it has acquired no official communication from New Delhi. But, this highlights a recurring actuality of worldwide diplomacy; oil is just not merely a traded commodity; it’s a strategic instrument that shapes alliances, sanctions, wars and commerce offers.The India–US commerce deal has introduced this dynamic into sharp focus, putting vitality safety and geopolitics alongside tariffs, provide chains and market entry.
The commerce deal that reset ties
US President Donald Trump and Prime Minister Narendra Modi took many without warning after they out of the blue introduced a commerce deal that can decrease tariffs on Indian items getting into the US to 18 per cent, down from 50 per cent; whereas in accordance with Trump’s claims India drops tariffs to zero. Whereas the settlement is but to be formally signed and finer particulars are nonetheless being labored out, it successfully ends a protracted stalemate and restores predictability to commerce ties.
Speaking about the advantages of this deal, Rudra Kumar Pandey, associate at Shardul Amarchand Mangaldas & Co, informed TOI, “The US determination to cut back tariffs on Indian items to a headline charge of 18 p.c marks a transparent de-escalation in bilateral commerce frictions and displays aligned strategic intent on either side. The transfer reinforces India’s export-competitive posture, supported by latest customs obligation rationalisation, and comes amid a broader US supply-chain recalibration away from China.”“What is especially encouraging is that Indian business has already demonstrated resilience by way of market diversification. Exports to Spain, as an illustration, reportedly rose by over 56 p.c to about USD 4.7 billion throughout April–November FY 2025–26, underscoring the flexibility of Indian exporters to scale in various markets. The reopening of the U.S. market, alongside bettering entry to Europe by way of the momentum of the India–EU commerce settlement, positions these sectors to return to a stronger and extra sustained development trajectory,” he additional added.The US is India’s single largest buying and selling associate, and the steep tariffs imposed by the Trump administration had damage Indian exporters. With the speed now minimize to 18%, India will regain competitiveness within the US market, significantly throughout labour-intensive sectors corresponding to clothes, leather-based, footwear, carpets, seafood and gems and jewelry.Speaking in regards to the impression on exports, Rudra Kumar Pandey stated, “The fast positive factors might be concentrated in tariff-sensitive and labour-intensive sectors which can be most conscious of marginal obligation modifications. Textiles and attire, gems and jewelry, leather-based and footwear, engineering items, and auto elements stand to profit disproportionately, as these sectors compete instantly with Vietnam and Bangladesh within the US market. Decrease efficient tariffs enhance India’s relative price place and are more likely to translate rapidly into larger order flows and sourcing diversification in India’s favour.”Additional explaining the commerce equation between India and US he added, export efficiency towards the US has already proven appreciable power regardless of the part of heightened commerce tensions. Shipments rose 11.3 per cent to about $59 billion between April and November 2025, with smartphone exports alone doubling to $16.7 billion. Bringing tariffs right down to an efficient charge of roughly 18 p.c is anticipated to consolidate these positive factors and assist sustained export development throughout a spread of producing sectors, in accordance with Pandey.India has additionally dedicated to purchase American items value $500 billion, in accordance with Trump. Sharing his insights on that, the Shardul Amarchand & Co associate stated, “The announcement that India may import as much as $500 billion of products from the USA types an express a part of the broader tariff-reset package deal and underscores the strategic stability of the settlement. The growth of imports is anticipated to be concentrated in vitality, superior know-how, and capital items, together with LNG and crude oil, industrial equipment, plane elements, and defence-related platforms. Higher entry to US vitality helps India’s provide diversification targets, whereas elevated inflows of high-value capital gear and know-how strengthen home manufacturing functionality and productiveness. Collectively, these measures anchor a extra strategic and mutually reinforcing bilateral commerce relationship with clear internet positive factors for India”In the meantime, Commerce minister Piyush Goyal has described the settlement as a “excellent” deal, noting that India now enjoys tariff remedy similar to — or higher than — its regional rivals. India’s new tariff charge is decrease than Vietnam (20%), Bangladesh (20%), Malaysia (19%), Cambodia and Thailand (19%), and much under China’s 34%. It’s also decrease than Pakistan’s 19%.
The place oil enters the image
Whereas tariffs had been the centrepiece of the deal, Trump’s Fact Social publish pointed to a broader geopolitical cut price. “We spoke about many issues, together with Commerce, and ending the Battle with Russia and Ukraine. He agreed to cease shopping for Russian Oil, and to purchase far more from the USA and, doubtlessly, Venezuela,” Trump wrote.The declare instantly raised questions. India has not introduced any determination to cease shopping for Russian crude. Russian officers, too, have stated they’re unaware of any such transfer. Kremlin spokesperson Dmitry Peskov stated Moscow had not acquired any official communication from New Delhi and that Russia supposed to proceed strengthening ties with India throughout all areas of cooperation.MEA on Thursday additionally addressed the query of the place India will purchase the oil from emphasising on vitality safety.
Indian refiners have additionally indicated that they’ve acquired no directive from the federal government to halt purchases of Russian oil. Based on refinery sources quoted by Reuters, any winding down of current transactions would require time, given contracts already beneath means.
Why oil stays a strategic commodity?
Oil is just not merely one other import commodity. It’s the spine of transport networks, industrial manufacturing, defence preparedness, inflation management and general financial stability. Within the case of main and quickly rising economies like India, the provision of low cost and warranted oil provides is important to sustaining development momentum, managing worth pressures, and securing vitality safety, particularly amid the present geopolitical uncertainties in numerous elements of the world.On the identical time, for world powers such because the US, oil provides are a extremely efficient instrument of overseas coverage. Sanctions, commerce agreements, and diplomatic maneuvering are generally used to find out the place nations procure their vitality from and at what costs. This has been obvious in US sanctions imposed on Russian oil merchants, in addition to in Washington’s fixed makes an attempt to disclaim the income base of its adversaries by limiting their entry to the worldwide vitality market.On this context, oil turns into inseparable from diplomacy. Power sourcing choices are now not strictly business or technical issues, however extra of a measure of strategic alignment and geopolitical positioning. Consequently, commerce talks, sanctions coverage, and overseas coverage are more and more formed by vitality issues, generally simply as a lot as tariffs or free market entry.
India’s reliance on Russian crude
Since Western sanctions intensified following the Russia–Ukraine warfare, India sharply elevated its consumption of discounted Russian crude, significantly the Urals grade. The reductions made Russian oil economically engaging, particularly for India’s complicated refining system, which is well-suited to processing such grades.Nonetheless, knowledge present that Russian oil imports have already been declining. Based on Kpler, Russia’s share of India’s crude imports fell to 33.7% between April and November 2025, from 37.9% in the identical interval the earlier 12 months. In absolute phrases, Russian crude imports dropped from about 1.8 million barrels per day in November to 1.2 million barrels per day in December, and additional to 1.16 million barrels per day in January 2026.Over the identical interval, the US share of India’s crude imports rose from 4.6 per cent to eight.1 per cent.
Regardless of this pattern, analysts warning towards studying the commerce deal as an instantaneous turning level. Sumit Ritolia, lead analysis analyst at Kpler, stated Russian volumes are largely locked in for the subsequent 8–10 weeks and stay economically important for India. He added that Russian imports are more likely to stay broadly secure by way of the primary half of 2026–27, with any moderation being offset by larger inflows from West Asia.
Can the US and Venezuela change Russian oil?
Donald Trump claimed that India would substitute Russian oil with provides from the US and/or Venezuela. Whereas US crude exports to India have already been rising, Venezuelan oil presents a extra complicated image.A latest report by SBI Analysis estimated that India may save nearly $3 billion per 12 months by changing a portion of its Russian oil imports with Venezuelan heavy oil, whether it is out there at a reduction of $10-12 per barrel. Venezuelan heavy oil is at present buying and selling at round $51 per barrel, as per Oil Worth data cited within the report.Nonetheless, the actual positive factors would rely upon quite a few elements, corresponding to the gap and logistics of transporting the oil, insurance coverage prices, and the refinery’s potential to course of the Venezuelan heavy oil. Solely Reliance Industries and Nayara Power have the capability to course of giant portions of Venezuelan oil, whereas state-owned refineries would wrestle to interchange even 10% of their present Russian oil imports, in accordance with refinery officers cited by ReutersThis implies any shift in sourcing would doubtless be gradual and partial, pushed by business feasibility as a lot as diplomatic signalling.
Power safety
The India–US commerce deal introduced important financial advantages, together with the discount of tariffs on nearly 60% of Indian exports to the US. Goldman Sachs projected a further GDP development of 20 foundation factors if the decreased tariffs are strictly utilized, whereas Barclays estimates the impact at 30 foundation factors.Markets responded positively, with a pointy rally in equities and a robust appreciation of the rupee proper after the announcement. Investor sentiment additionally improved as uncertainty receded to a big extent.But the oil query introduces a layer of strategic complexity. India has maintained a stability in its relations, strengthening ties with the US whereas persevering with to cooperate with Russia, with whom it has been related for a very long time, and managing its vitality dependencies in West Asia, Africa, and South America.For New Delhi, oil shopping for has been primarily guided by vitality safety and value issues. For Washington, vitality sourcing is usually linked to broader geopolitical targets, together with sanctions enforcement and stress on adversaries.
All of it comes again to grease
The India-US commerce settlement is a reminder that in right now’s world of geopolitical uncertainties and fragmented world provide chains, oil is a vital bargaining chip. It’s a commodity that finds itself on the intersection of politics, economics, and safety.Whereas the minute particulars of the commerce settlement are nonetheless being labored out, this a lot is evident: oil will proceed to be an element not solely in commerce agreements however within the general politics of energy. For a rustic like India, this may proceed to be a difficult tightrope stroll between strategic autonomy and financial pragmatism.
Oil wars
Oil, being a centre level in worldwide relations, is just not restricted to India. Actually, it has been on the coronary heart of among the world’s most consequential wars and geopolitical confrontations. Most lately, In Venezuela, lower than a month after a US navy operation resulted within the seize of President Nicolás Maduro and his spouse, lawmakers in Caracas accepted a landmark legislation opening the nation’s lengthy state-controlled oil sector to non-public and overseas firms, a reversal of greater than 20 years of nationalisation aimed toward engaging US and different traders.The transfer follows stress from the Trump administration, which has eased some sanctions and signalled sturdy involvement of American vitality companies in revitalising Venezuela’s oil manufacturing, exhibiting how management over crude reserves stays a core strategic goal for world powers.Furthermore, for over a century, nations have gone to warfare, altered navy methods or imposed sweeping sanctions to safe entry to grease fields or stop rivals from controlling a useful resource that fuels fashionable economies and armed forces. Management over oil has typically meant management over industrial output, navy mobility and financial survival, turning vitality right into a strategic goal moderately than a business asset.
Historic conflicts present this actuality, as defined by an article from an American worldwide relations journal The Nationwide Curiosity. Japan’s determination to assault the US at Pearl Harbor in 1941 was triggered largely by an American-led oil embargo that threatened to cripple its navy and air drive. Equally, Nazi Germany’s push in direction of the oil-rich Caucasus throughout World Battle II mirrored Adolf Hitler’s obsession with securing gasoline provides for his warfare machine, a raffle that finally contributed to Germany’s defeat at Stalingrad when oil ambitions overextended navy capability.Oil has additionally influenced the wars within the Center East. Within the Eighties Iran-Iraq Battle, Iran and Iraq attacked one another’s oil tankers and export amenities within the Persian Gulf, thus referred to as the ‘Tanker Battle,’ which noticed the USA instantly enter the battle to safeguard oil delivery routes. Then in 1990, Iraq’s invasion of Kuwait, which was fueled partially by disagreements over oil manufacturing and entry to sources, led to the Gulf Battle and many years of West Asian geopolitics.All these conflicts reinforce a recurring sample; that oil has persistently functioned as leverage, shaping wars, alliances and worldwide disputes, far past its function as a traded commodity.
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