The 50% misfire: How Trump made Russian oil cheaper for India - And Putin a winner

President Donald Trump last week doubled US tariffs on Indian goods to 50%, targeting New Delhi’s continued purchase of discounted Russian oil-a trade Washington says bankrolls Moscow’s war in Ukraine.

But rather than isolating India or throttling the flow of Russian crude, the move has backfired:

• Russia slashed prices further to hold onto its Indian buyers.
• India resumed purchases after a brief pause, taking advantage of the growing price gap between Russian and Middle Eastern oil.
• China stepped in to snap up the surplus, increasing orders of Russian Urals crude for October by 10x from September levels, according to Argus Media.

The result? Moscow’s oil is more entrenched in Asia than ever, and the black market that supports it is booming.



Why it matters
India’s Russian oil intake has only increased, now comprising 37% of all its crude imports-up from just 1% four years ago, according to Kpler.
Instead of punishing India, Trump’s tariffs are:

• Making sanctioned Russian crude even cheaper-now trading at up to $7 per barrel below Omani grades.
• Widening the price gap between Urals and US or Middle Eastern crude, making it hard for Indian refiners to say no.
• “A barrel of Urals crude costs India $1 less than it did before the White House first threatened the higher tariff,” said a report in the Wall Street Journal.

New Delhi isn’t just resisting US pressure-it’s deepening its ties with Russia and China. PM Modi traveled to China this week for the Shanghai Cooperation Organization summit, meeting President Xi and reaffirming India's “special” relationship with Russia.


Zoom in: The Russian crude playbook
The price war:

• Russia’s Urals crude is now offered to Indian refiners at a wider discount—up to $3–4 off Brent, compared to just $1 in July.
• Meanwhile, US crude is selling at a $3 premium, giving Indian refiners every reason to return to Russia.
• Refinery disruptions in Russia-caused by both planned maintenance and Ukrainian drone attacks-have ironically made more crude available for export.
• In August, attacks disabled up to 17% of Russian refining capacity, further driving seaborne exports.

The workaround fleet:

• To evade Western detection, Moscow relies on a growing fleet of “cloaked” vessels. Bloomberg reports 32 tankers loaded 24.45 million barrels of Russian crude the week ending August 31.
• As per the report, one shipment to India came via a US-sanctioned vessel (Victor Konetsky) using a ship-to-ship transfer, a key tactic in sanction evasion.

Flows by destination:

• India: Russian oil shipments down 28% since March—but rebounding fast.
• China: Shipments hit 1.28 million barrels/day, a five-month high.
• Total seaborne exports: Back up to 3.49 million barrels/day.

The big picture
The Trump administration’s strategy is hitting turbulence on three fronts:
1. India isn’t complying.
Indian refiners paused Russian purchases briefly in early August but quickly resumed. Cheaper Urals barrels—now discounted up to $3–4 off Brent—are flowing again, Bloomberg reports.
2. Russia is adapting.
Moscow quickly re-routed unsold oil to China, boosting its total seaborne exports to a seven-week high of 3.49 million barrels per day, per tanker-tracking data.
3. The black market is thriving.
With Western sanctions covering 15% of global crude supply, shadow fleets have exploded in size.
“In 2022, 427 so-called shadow vessels were suspected of transporting sanctioned energy,” said Claire Jungman of Vortexa. That number has now quadrupled.

Collateral damage: American consumers
Far from curbing Russian oil revenues, the tariffs have sparked a price war. Russia’s strategy is clear: keep exports high, prices low, and let market forces do the rest.

According to Reuters, traders expect a 10–20% rise in Indian purchases of Russian oil this month. If that happens, India’s daily intake could hit 1.8 million barrels—a volume nearly double what it imported in early 2023.

This aggressive buying has helped keep global oil prices from soaring. Analysts at Citi estimate that if India had stopped buying Russian oil altogether, prices could have spiked to $100 a barrel-potentially triggering inflation spikes across the West, including in the US.

That’s the contradiction at the heart of this policy: If the White House successfully chokes off Russian crude exports, the result may be costlier gasoline for American drivers. But failing to choke them off only makes the White House look toothless.

What’s next

• September and October will be key indicators.
• The full effect of Trump’s tariff might only show up in October cargo arrivals, when sanctions filter through purchasing and logistics.
• Meanwhile, the EU has tightened its price cap on Russian oil to $47.60/barrel-15% below market-to reduce Kremlin revenue.
• But with Asia absorbing Moscow’s crude, the impact remains muted.
• And there’s a tradeoff Washington isn’t eager to discuss:
• Clamping down harder could mean higher gas prices for American consumers.
• The black market for oil remains the pressure-release valve keeping global supply steady.

The bottom line
Trump’s 50% tariff on India was supposed to punish New Delhi and pressure Moscow. Instead, it’s:

• Making Russian oil cheaper and more desirable in Asia
• Boosting Russia’s export revenues, now up $310 million in a single week
• Strengthening black market networks built to circumvent Western sanctions
• Driving India, Russia and China closer together, both economically and diplomatically
• Far from isolating Russia, the tariff has only made it more competitive in the global energy market-and harder to contain.

(With inputs from agencies)