Crude Oil Steady as India Doubles Down on Russian Flows Despite New US Tariff Risks

India’s record Russian crude intake in July 2026 signals continued support for Moscow’s barrels despite fresh US sanctions legislation, limiting immediate upside for global prices but adding a new layer of policy risk. The key market question is not if India cuts Russian flows, but what premium the market will demand for the growing geopolitical tariff overhang. India’s Russian crude imports climbed to 2.78 mb/d in July 2026, more than half of its total 4.96 mb/d crude intake, even as the US Senate passed the Lindsey O. Graham Sanctioning Russia and Iran Act with 86–11 votes, granting President Trump authority to levy up to 100% tariffs on top buyers of Russian energy. New Delhi’s clear prioritisation of cheap Russian barrels for inflation control and refinery margins suggests that any adjustment will be gradual and tactical. For the global crude complex, this keeps Russian volumes firmly anchored in Asia for now, but raises the odds of more fragmented trade flows, shifting freight patterns and a wider quality spread between Russian grades and benchmarks.

Prices

Benchmark crude has remained range-bound as strong Russian export availability offsets Mideast and sanctions risk, while India’s record July purchases confirm that discounted Russian barrels are still flowing freely into the market. With Urals and similar Russian grades continuing to clear at steep discounts to Brent, India’s buying pattern is capping any sustained rally by absorbing cheap supply that might otherwise be curtailed. The newly passed US Senate bill is a clear upside risk, but the market is discounting near-term impact because tariffs remain discretionary, must still clear the House, and could face domestic US resistance given potential inflationary spillovers. In the short term, this combination argues for continued price consolidation rather than a structural break higher, with periodic volatility around US political headlines.

Supply & Demand

India imported a record 2.78 mb/d of Russian crude in July against total crude imports of 4.96 mb/d, meaning Russia supplied more than half of New Delhi’s monthly purchases. This confirms India’s role as Russia’s second-largest crude customer after China and underscores the depth of the bilateral energy relationship. Indian officials view affordable Russian oil as critical to keeping refinery input costs, domestic fuel prices and inflation in check, and as an extension of broader energy and defence ties with Moscow. That strategic calculus makes a sharp, sanctions-driven cut in Russian purchases unlikely, particularly while Russian grades trade at a discount and India is still diversifying away from costly Middle Eastern barrels. On the supply side, Russian seaborne exports remain close to record levels above 4 mb/d, supported by robust demand from India and China and continued use of a shadow tanker fleet. As long as these flows remain largely unimpeded, they plug much of the potential supply gap that might otherwise be created by disruptions in other regions, dampening bullish price pressure.

Fundamentals & Policy

The Lindsey O. Graham Sanctioning Russia and Iran Act, recently passed by the US Senate, would empower President Trump to impose tariffs of up to 100% on imports from the largest buyers of Russian oil and gas, explicitly including India and China. However, the measures are not automatic: the bill still requires House approval, and any tariffs remain at the president’s discretion rather than mandated by statute. Domestic opposition in the US focuses on the risk that broad tariffs on Indian and Chinese goods would raise input costs for American businesses and consumers, adding another political filter before any aggressive use of the tool. India’s experience in 2025–26 is instructive: an additional 25% US duty on Indian imports in August 2025 only briefly moderated Russian crude purchases, which still accounted for about 30% of India’s total oil imports in FY2025–26 and were valued at $40.82 billion. Buying only eased more materially once tariffs were withdrawn in February 2026 under an interim trade deal. This history suggests that even if new tariffs are levied, India is more likely to adjust the composition of its Russian purchases and redirect some refined-product exports than to abandon the trade altogether. For crude fundamentals, that implies continued Russian volumes in the global system, albeit potentially with more circuitous trade routes and heavier use of intermediaries.

Outlook & Trading View

In the coming weeks, India is expected to maintain elevated Russian crude intake while closely monitoring the progress of the US legislation and parallel bilateral trade negotiations with Washington. New Delhi is simultaneously expanding energy purchases from the US, reinforcing its leverage to seek carve-outs or phased implementation if tariffs move from theory to reality. For the crude market, the most likely path is a gradual repricing of geopolitical risk rather than an abrupt supply shock. The threat of secondary tariffs will support a modest risk premium in Brent while keeping Russian grades structurally discounted, especially into Asia. Any additional weakness in Russian pricing relative to benchmarks should further incentivise Indian and Chinese refiners to keep lifting volumes, tightening margins for Atlantic Basin refiners relying on alternative sour grades.

• Benchmark Brent in EUR terms is likely to trade sideways with an upward bias as long as Russian flows to India and China remain intact and no immediate tariff action is taken.
• Russian grades should maintain a significant discount to Brent, reflecting both direct sanctions and the added option value of potential US secondary tariffs.
• Refiners with flexibility to process Russian or similar discounted sour grades retain a clear feedstock cost advantage versus peers tied to pricier Atlantic Basin supplies.

3-Day Directional View (EUR Terms)