India-Russia oil trade: EU's sanctions unlikely to have much impact, say experts

The European Union’s (EU) latest round of sanctions is unlikely to have much impact on India’s booming oil and energy trade with Russia, experts say.

They point out that such measures may even boost the trade further.

EU sanctions Vadinar refinery

What, however, worries Indian policy planners is the possibility of the US Congress passing a proposed legislation to impose massive tariffs on countries like India that trade with Russia.

“If that happens, it will pose a very serious challenge for India,” said an expert.

Also read: India rejects EU's ‘unilateral sanctions’ that target Gujarat’s Vadinar refinery

The EU on Friday (July 18) sanctioned Gujarat-based Vadinar refinery, jointly owned by Russia’s Rosneft and an Indian investment consortium.

This is part of its attempt to put a heavy cost on Russia and force it to end the Ukraine war.

India criticised the “unilateral sanctions” and said there should be no “double standards” on energy trade which was of paramount importance to Indian citizens.

Sanctions come amid US and NATO warnings

Vadinar is the first energy firm in India that was targeted by the sanctions.

Also read: India warns against 'double standards' on Russia trade

The latest round of sanctions comes in the wake of United States President Donald Trump warning countries buying Russian commodities that they could face sanctions if the leadership in Moscow failed to reach a peace agreement with Kyiv within 50 days.

The NATO chief Mark Rutte followed Trump’s threat by naming India, Brazil and China among those that may face sanctions for trading with Russia.

Oil cap helps India

The EU measures have capped the purchase of Russian crude at 15 per cent below its average market price, a cap of roughly $47.60 per barrel.

Also read: NATO warns India, China, Brazil of 100 pc sanctions over Russia trade

This is far below the $60 maximum the Group of Seven proposed to impose in December 2022.

“This will allow us to buy more oil from Russia at a much cheaper price than what we were paying so far,” says Anil Wadhwa, a former secretary in the Ministry of External Affairs.

The argument is supported by other Indian diplomats who pointed out that the EU sanctions were not directed against India.

“We need to diversify our supply of the oil we buy from Russia and use it more for domestic and other markets,” said a retired Indian diplomat.

Russia is India’s major oil supplier

India imports over 85 per cent of its oil and gas from foreign sources.

Among its top suppliers are Iraq, Saudi Arabia, Russia, the United States, and the United Arab Emirates. Though Iraq is still the largest supplier, Russia has become a major source since the Ukraine war began in 2022.

According to the Centre for Research on Energy and Clean Air’s (CREA) latest report, Russia’s stronghold over new markets has solidified in the third year of the invasion.

The three biggest buyers of Russian energy are China (78 billion euros), India (49 billion euros) and Turkey (34 billion euros).

The value of India's import saw an 8 per cent year-on-year increase, it said.

Russia's total global fossil fuel earnings in the third year of the invasion reached €242 billion and have totalled €847 billion since the invasion.

Despite the western attempts of curbing Russia’s revenue from energy there is little chance of success as Moscow may step up its production of oil and gas to make up for the deficit, say experts.

India has diversified sources

Though nearly 60 per cent of India’s energy needs are met by the countries in the Gulf, since the energy products are determined by prevailing market rates India is also in the look out for cheaper sources of oil and gas.

From 27 the number has now gone up to 40 countries from which India buys oil, gas and other energy products, said Indian oil minister Hardeep Singh Puri.

They range from Nigeria, Angola and Algeria, to Libya, Equatorial Guinea, Congo, and Gabon in Africa. While in Latin America its main sources are Venezuela and Brazil. It also buys from Colombia and Mexico.

Double standards

India has accused the EU for having “double standards” on buying energy from Russia. It has enthusiastically joined the US in imposing sanctions on Russian products but until June 2025 was the fourth largest buyer of Russian oil and gas.

The five largest European importers of Russian fossil fuel paid a total of 1.2 billion euros.

CREA claims the EU does not sanction natural gas from Russia, which accounts for over 72 per cent of the imports and is mainly delivered by pipeline or as liquefied gas.

The rest was mostly crude oil, which continues to flow to Hungary and Slovakia via the southern branch of the Druzhba pipeline that has also been under an EU exemption.

The EU ambassador to India, Herve Delphin clarified last week that the sanctions were not to disrupt the stability in the global energy market and not directed against India.

It is an attempt to curb Russia’s revenue earnings and bring an early end to the Ukraine war, he added.

India-US engaged in trade negotiation

India is engaged with the US on signing a trade agreement by the end of July to avoid Trump’s Tariff on Indian products which may go up to 26 per cent.

Both sides are keen on a deal but negotiations are stuck on agricultural products and automobile components. If they fail, both sides will end up imposing reciprocal tariffs on each other’s products making them less lucrative to be sold in their respective markets.

US Senate proposes 500 per cent tariff

The Congress is now planning to propose an imposition of a 500 per cent tariff on countries that trade with Russia.

The proposed legislation called Sanctioning Russia Act, 2025 was introduced in April. In the 100-member Senate it already has support from 82 Senators.

To pass, it has to go through both the Senate and the House of Representatives. So far there has been no indication from the House that it will put the proposed legislation to vote.

Indian officials of the Ministry of External Affairs (MEA) and other ministries are now trying to lobby with key Congressmen and Senators to desist from pushing the Bill in the Congress.

It has a provision for the President to grant a 180 waiver to countries that may come under the purview of the Act.

Though under a Trump presidency it will always remain uncertain on how the Act will be used.