US Waives Tariffs on Russian Oil for India: Strategic Interests Trump Sanctions

A fortnight ago, the Trump administration was levying punitive tariffs on India for buying Russian oil, claiming such purchases bankrolled Putin's war machine. This week, Washington issued a 30-day waiver explicitly authorising those same Russian oil transactions. The catalyst for this whiplash reversal? America's own military campaign against Iran has severed the energy arteries its strategic partner depends upon.

The contradiction is stark enough to merit spelling out. Treasury Secretary Scott Bessent announced the waiver as a "deliberate short-term measure" to address the closure of the Strait of Hormuz, which Tehran has effectively blockaded since US and Israeli strikes began last Saturday. Nearly half of India's crude oil and gas imports transit through this narrow Gulf chokepoint. With those supplies cut off and domestic stocks depleting to roughly 25 days' worth, New Delhi faces an acute energy crisis.

Washington's solution? Allow India to purchase the very Russian barrels it recently imposed a 25% tariff on. The waiver covers an estimated 145 million barrels of Russian crude already at sea, according to analysis from Kpler shared with the BBC. That represents a finite, one-time release rather than an ongoing supply arrangement. Commercial deals still need finalising before any of these tankers redirect toward Indian ports, but the policy mechanism is now in place.

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When sanctions meet reality

What makes this reversal particularly instructive is the recent history. In early 2025, the Trump administration imposed 50% tariffs on Indian imports, including the 25% levy specifically targeting Russian oil purchases. The justification was familiar: such trade funds Moscow's invasion of Ukraine and must be curtailed. Trump subsequently claimed on Truth Social that Prime Minister Narendra Modi had "agreed to stop buying Russian oil, and to buy much more oil from the United States and, potentially, Venezuela."

India never officially confirmed any such agreement. New Delhi has consistently maintained it will not allow external powers to dictate its trading relationships, though reports suggested Russian crude imports had begun declining in late 2024. The Modi government's official position remains unchanged: India must meet the energy needs of 1.4 billion people and will source supplies where commercially viable.

India has consistently maintained it will not allow external powers to dictate its trading relationships and will source supplies where commercially viable.

Russian oil comprises approximately 20% of India's total crude imports. The country imports 90% of its crude requirements, making it structurally vulnerable to supply disruptions. Between 2.5 and 2.7 million barrels per day typically flow through the Strait of Hormuz to Indian refineries, sourced from Iraq, Saudi Arabia, the United Arab Emirates and Kuwait. That pipeline is currently severed, with no clear timeline for restoration.

The downstream effects

The immediate impacts are already materialising. Petronet LNG, India's largest gas importer, issued a force majeure notice on Wednesday after its tankers proved unable to reach the loading terminal at Ras Laffan in Doha. The Gas Authority of India Ltd and Indian Oil Corp have begun curtailing gas supplies to industrial customers, according to Reuters. Energy analysts warn the supply crunch risks stoking inflation and widening India's fiscal deficit, though the waiver provides temporary breathing room on the crude side.

Bessent insisted the measure would "not provide significant financial benefit" to Russia, framing it as simply allowing already-purchased oil to reach its destination rather than creating new revenue streams for Moscow. That characterisation is debatable. Any Russian oil sale generates hard currency, and the waiver explicitly enables transactions the US was previously seeking to suppress. The Treasury Secretary's phrasing serves clear political purposes: acknowledging that America's Iran campaign has forced Washington to undercut its own Ukraine-related sanctions regime would be rather more awkward.

Any Russian oil sale generates hard currency, and the waiver explicitly enables transactions the US was previously seeking to suppress.

The strategic calculation appears straightforward enough. India represents a crucial counterweight to China in Washington's Indo-Pacific strategy. Allowing a major partner to slide into energy crisis whilst fighting a war in the Gulf serves no American interest, regardless of how it complicates messaging around isolating Russia economically. Pragmatism has trumped policy consistency, as typically happens when geopolitical crises collide.

The 30-day clock

But the waiver's brief duration raises obvious questions about what happens when the authorisation expires. If the Strait of Hormuz remains closed beyond 30 days and the 145 million barrels at sea have been exhausted, India faces the same structural problem with no stopgap in place. The waiver addresses immediate crisis management but doesn't resolve India's fundamental dependence on Middle Eastern crude routed through a single chokepoint that Washington's military actions have rendered impassable.

Sumit Ritolia, lead research analyst at Kpler, put it plainly: "The waiver does not fundamentally change India's structural exposure to Middle Eastern supply flows." Those flows remain blocked. The Russian crude at sea represents a one-time buffer, not a sustainable alternative.

Whether the Trump administration extends the waiver, negotiates alternative supply routes, or expects the strait to reopen before the clock runs out will determine whether this represents genuine crisis management or simply deferred consequences. What the episode has already demonstrated is how quickly sanctions regimes crack when they collide with strategic imperatives elsewhere. Washington spent months pressuring India to abandon Russian oil, only to authorise precisely those purchases the moment its own military campaign created an energy emergency.

The policy contradiction isn't a bug. It's what happens when great power competition plays out across multiple theatres simultaneously, and priorities shift with events.

More articles by Ross Williams