India has cut its oil imports from Russia to 460,000 barrels per day, the lowest level since April 2022. This marks the third week in a row of decreases and is significantly lower than the mid-July average of 1.6 million barrels per day.

Impact Of US Tariffs

This reduction follows the US imposing a 25% punitive tariff on India, which will increase to 50% in three weeks as reciprocal tariffs are put in place. Indian state-run refineries have been told to stop buying Russian oil in response. In contrast, China’s crude oil imports remained strong at 47.2 million tons, or 11.13 million barrels per day, in July. Although this is a 5.4% drop from the previous month, it’s an 11.5% increase compared to July of last year. Russia was China’s top oil supplier in June, providing over 2 million barrels per day. As this unfolds, China’s ongoing oil purchases from Russia continue to be a point of tension with the US. Data about the origin of China’s oil imports will be released later this month, offering more information about global oil trade trends. India’s slowdown in Russian oil purchases creates a gap in the market that needs to be filled. This situation may boost global benchmarks like Brent crude since Indian refiners will now compete for barrels from the Middle East and West Africa. This quick shift in supply could tighten the market for immediate deliveries in the upcoming weeks.

Geopolitical Risks And Market Volatility

The growing trade dispute between the US and India adds significant geopolitical risk, which likely leads to increased market volatility. Recently, the CBOE Crude Oil Volatility Index (OVX) jumped from the low 30s to 42 in just a few days. Traders may want to consider buying options to capitalize on these expected large price fluctuations. One key trade focuses on the price difference between Russian Urals and Brent crude. After European sanctions began in mid-2022, the spread widened to over $30 per barrel. With India stopping its purchases, the Brent-Urals spread has already increased to $18, and we anticipate it could reach around $25 as the US tariffs fully take effect. We also need to keep an eye on China, which is importing a significant amount of crude and balancing the market. China’s latest Caixin Manufacturing PMI for July 2025 was strong at 51.5, showing that their demand for energy remains robust. This steady demand will likely support global oil prices and avoid a major price drop. Now, attention should turn to what types of oil will replace the Russian barrels in India’s refineries. Recent tanker tracking indicates a rise in interest for Iraqi Basrah Light and Saudi Arab Light for September deliveries. This shift may create short-term price premiums for these specific Middle Eastern grades in the coming month. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now