US President Donald Trump has claimed that India has agreed to halt its imports of Russian crude oil as part of a new trade deal with the United States.

This arrangement reportedly slashes tariffs on Indian goods entering the US market from 50 per cent to 18 per cent. Trump made the announcement on his Truth Social platform, hailing Prime Minister Narendra Modi as "one of my greatest friends."

The deal, according to Trump, involves India replacing its Russian oil purchases with supplies from the United States and potentially Venezuela. He framed this shift as a step towards ending the war in Ukraine, where thousands continue to die weekly. However, full details of the pact remain undisclosed, leaving room for speculation on its scope.

India currently imports around 1.5 million barrels of Russian crude per day, accounting for over one-third of its total oil imports. Data from global trade tracker Kpler positions India as the world's second-largest buyer of Russian crude. This reliance intensified after Russia's 2022 invasion of Ukraine, when discounted Russian oil became a boon for India's energy security.

Prime Minister Modi responded positively to the tariff reduction on X, describing it as "wonderful" news. He praised Trump's leadership for fostering global peace, stability, and prosperity but stopped short of confirming any cut in Russian oil purchases. The Indian government has long defended these imports as vital for meeting domestic energy demands.

Historically, India-Russia ties centred on defence, with Moscow supplying the bulk of New Delhi's military hardware. Energy played a minor role until post-invasion discounts prompted a surge in Russian crude flows. This pragmatic move helped India bolster supplies while aiding Russia's war economy.

Trump's assertion echoes earlier unfulfilled promises. In October 2025, he claimed Modi had pledged to end Russian oil buys, yet no deal emerged. As recently as December 2025, President Vladimir Putin visited New Delhi and vowed uninterrupted fuel shipments despite US pressure.

The proposal to pivot to Venezuelan oil hinges on its similarity to Russian crude—both sour and heavy, ideal for India's refineries geared towards diesel and fuel oil production. Yet Venezuela's output pales in comparison; New Delhi imports far more from Russia than Caracas produces today.

Venezuela's oil infrastructure lies in ruins after decades under socialist rule, requiring tens of billions in investment and over a decade to revive pre-1999 levels of more than 3 million barrels per day. Partial replacement might be feasible, but fully supplanting Russian volumes poses steep challenges.

Rob Haworth, senior investment strategy director at US Bank Asset Management, told CNN that significant investments would be needed for a complete switch to Venezuelan or US oil. Over time, he noted, this could strain Russia's economy further by eroding a key revenue stream.

For India, the third-largest oil importer globally, energy security remains paramount. Over 80 per cent of its crude needs come from abroad, making diversified sources critical amid volatile geopolitics. Russian oil's discount—often 20-30 per cent below benchmarks—has saved billions, cushioning consumers from price shocks.

The tariff cut to 18 per cent marks a competitive edge for India over rivals like China, Pakistan, and Bangladesh, which face higher US duties. This could boost exports of textiles, pharmaceuticals, and electronics, sectors hit hard by previous levies. Trade leaders have hailed it as a turning point in bilateral ties.

External Affairs Minister S Jaishankar echoed this optimism, stating the deal would strengthen "Make in India" initiatives and spur growth. It aligns with New Delhi's push for indigenous manufacturing amid global supply chain shifts.

Yet the Russian oil clause tests India's strategic autonomy. Balancing ties with the US—its largest defence partner after Russia—while securing cheap energy has defined Modi's diplomacy. Past instances, like buying discounted Russian oil despite G7 sanctions, underscore this tightrope.

Broader implications ripple through global energy markets. A Russian oil exit by India could depress Moscow's revenues, already squeezed by Western sanctions, potentially hastening Ukraine peace talks as Trump envisions. Conversely, it might inflate global prices if alternative supplies falter.

US shale producers stand to gain, with increased Indian demand filling tankers headed east. Venezuela, under easing US sanctions, could see a revival lifeline, though political risks linger. For India, higher costs from pricier US or Venezuelan barrels might fuel inflation.

Sceptics question the deal's feasibility without ironclad commitments. India's refiners, optimised for Russian grades, face technical hurdles adapting to lighter US crudes. Retrofitting could take years and billions, per industry estimates.

This fits Trump's "America First" revival, using trade levers to isolate Russia. It pressures India, a Quad member countering China, to align more firmly with Washington. Modi’s reticence on oil cuts suggests negotiations continue behind closed doors.

As details emerge, markets watch closely. Brent crude dipped slightly post-announcement, reflecting uncertainty. India’s December 2025 data showed Russian imports at record highs, hinting at any pivot's gradual nature.

Ultimately, this pact could redefine India-US relations, blending economic incentives with security goals. Whether it curbs Russian oil flows or proves another false dawn remains to be seen.

Agencies