Donald Trump is moving to close sanctions loopholes that help finance Moscow’s war efforts. But what could a clampdown on Russia’s oil trade mean for global markets and major economies like China and India?
India and China have firmly pushed back against U.S. President Donald Trump’s threats of secondary sanctions—penalties aimed at countries that continue doing business with sanctioned nations—due to their ongoing purchases of Russian oil, a major revenue source fueling Moscow’s war in Ukraine.
Both countries have pledged to safeguard their energy security and economic independence, with Beijing denouncing Washington’s actions as “coercion and pressure.” Notably, China emerged as the top importer of Russian oil in 2022.
India, on the other hand, criticized Western nations for what it called double standards, highlighting that the European Union still imports Russian energy—albeit at reduced levels—despite condemning the war. New Delhi also pointed out that the United States had initially supported its decision to increase oil imports from Russia following the invasion, as a means to help stabilize global energy prices.
Between 2021 and 2024, India’s oil imports from Russia surged nearly 19 times—from just 0.1 million to 1.9 million barrels per day—while China’s imports rose by 50%, reaching 2.4 million barrels daily.
According to Petras Katinas, an energy analyst at the Centre for Research on Energy and Clean Air (CREA) in Lithuania, India—the second-largest buyer of Russian oil—saved up to $33 billion in energy costs between 2022 and 2024, thanks to steep discounts from Moscow after the West scaled back its dependence on Russian oil and gas.
Katinas noted that India’s long-standing strategy of maintaining balanced relations with the U.S., Russia, and China has played a key role in its decision to purchase discounted Russian crude—driven primarily by a focus on securing affordable and reliable energy.
Trump’s New Sanctions Threat Shakes Global Markets
After already imposing a 25% tariff on Indian imports, U.S. President Donald Trump announced a fresh executive order on Wednesday, adding another 25% tariff on the same goods—this time in response to India’s continued oil trade with Russia.
The announcement sent oil prices climbing nearly 1%, while Indian media reported that the new tariffs could raise the country’s oil import costs by as much as $11 billion. In response, New Delhi slammed the move as “unfair, unjustified, and unreasonable.”
Trump stated that the new tariffs would take effect in 21 days, providing a window for negotiations between India, Russia, and the U.S. administration. The president is also expected to unveil broader secondary sanctions targeting countries and entities that maintain oil trade ties with Russia. The White House said further details would be released on Friday.
Secondary sanctions would deal another heavy blow to Russia’s economy, already under strain from existing Western restrictions. With military spending now surpassing 6% of its GDP and unofficial inflation rates estimated at 15–20%—far above the government’s 9% figure—Russia’s financial reserves are rapidly depleting, placing immense pressure on its budget and weapons production.
For global markets, these new sanctions could spark a shockwave similar to the one in 2022, when oil prices soared and Russia sidestepped Western bans by offering discounted crude to major economies like India and China.
“If India hadn’t purchased Russian oil in 2022, there’s no telling where prices would have gone—$100, $120, even $300 per barrel,” said Sumit Ritolia, an oil analyst at trade research firm Kpler. At the time, WTI crude prices hovered between $85 and $92 per barrel just before Russia’s invasion of Ukraine.
Now, Trump’s proposed 25% “secondary tariff” could force India to scale back at least part of its oil trade with Russia—especially if further sanctions follow.
According to analyst Petras Katinas, secondary sanctions significantly raise the stakes by “jeopardizing Indian companies’ access to the U.S. financial system and exposing refineries, banks, and shipping companies to serious risks, given their deep connections to global markets.”
Oil Price Surge Set to Fuel Global Inflation
Analysts warn that if Russia’s five million barrels per day were suddenly pulled from the global oil market, prices could skyrocket as countries scramble to find alternative sources. Even with OPEC recently ramping up production, replacing that volume in the short term would be extremely challenging due to limited spare capacity and logistical hurdles.
“There’s no way to replace those five million barrels quickly enough to stop an oil price surge,” said Alexander Kolyandr, a senior fellow at the Center for European Policy Analysis, in a statement to the Independent.
Sumit Ritolia, an oil analyst at Kpler, told DW that it could take Indian companies up to a year to reduce their dependency on Russian oil, if forced to do so.
A spike in oil prices would likely trigger a fresh wave of inflation both in the U.S. and around the world. The U.S. Federal Reserve estimates that every $10 increase in crude oil adds approximately 0.2 percentage points to inflation. India’s central bank has drawn similar conclusions.
If oil prices were to jump from the current $66 to $110–$120 per barrel, it could add nearly a full percentage point to inflation, increasing costs for consumers and businesses—especially in sectors like transportation, energy, and food.
China Gets a Pass, While India Feels the Heat?
Petras Katinas notes that China, whose trade volume with the U.S. is more than four times that of India, might be spared from these new American measures. With U.S.–China trade exceeding $580 billion, Beijing’s economic weight gives it considerable negotiating power that New Delhi lacks.
Moreover, China’s control over rare earth minerals—a long-standing point of tension with the U.S.—could serve as further leverage in softening Washington’s stance.
India, however, doesn’t hold the same economic clout. Earlier this week, President Trump doubled down on New Delhi, stating that the impact of his new sanctions on both Russia and India would “take their dead economies down together.”
When asked Wednesday why India was being targeted more aggressively than China, Trump responded: “It’s only been 8 hours. So let’s see what happens. You’re going to see a lot more… You’re going to see so many secondary sanctions.”
India’s Oil Windfall is Fading
India is no longer enjoying the steep discounts on Russian oil it once did in 2022, when prices were slashed by $15 to $20 per barrel. According to Kpler analyst Sumit Ritolia, that gap has now narrowed significantly to just around $5 per barrel.
With rising demand from Turkey—now Russia’s third-largest oil buyer—and several Asian countries, Russia is aggressively working to boost energy revenues to fund its war efforts. Much of its crude is quietly rebranded and rerouted to avoid U.S. sanctions, helping maintain demand despite global restrictions.
Despite the shrinking margins, Indian refiners continue their purchases. In June, oil imports from Russia surged to an 11-month high of 2.08 million barrels per day, making up 44% of India’s total crude imports. This rebound reflects strategic hedging by Indian firms amid ongoing geopolitical uncertainty and the relative affordability of Russian oil.
Meanwhile, China’s response appears more calculated. Based on its previous reactions to secondary sanctions, Chinese banks have become increasingly hesitant to process Russian transactions—even in yuan—pushing Moscow toward shadowy intermediaries and third-country routes.
Still, China treats energy imports as a strategic priority that’s largely insulated from political pressure. India, in contrast, is seen as more likely to make modest adjustments under U.S. pressure—reducing purchases, but not cutting them off completely.
