2 million barrels a day: Will India walk away from Russian oil under Donald Trump’s tariff threat?
Even in an oversupplied market, any aggressive enforcement could jolt the balance. Scotiabank estimates a global oil surplus of 1 million barrels per day in the second half of 2025, widening to 2 million in early 2026.
- Jul 31, 2025,
- Updated Jul 31, 2025 8:52 AM IST
A threat from President Trump to slap an unspecified penalty on countries importing Russian oil—specifically India—has injected new volatility into the global energy market, Scotiabank warns.
With India now one of the largest buyers of Russian crude, the move could ripple far beyond geopolitics and into oil supply chains worldwide.
In a note, Scotiabank analysts said the Trump administration’s surprise threat comes on the back of a 25% tariff on Indian goods and a 10-day ultimatum for Russia to broker a ceasefire with Ukraine. While no concrete penalty has been defined, the potential enforcement has already raised alarm among oil traders.
India has ramped up Russian crude imports from virtually zero to nearly 2 million barrels per day since the war began—making Russia its largest oil supplier and positioning India as one of Moscow’s top two customers.
“Will India be able to replace oil imported from Russia?” Scotiabank asks. The answer, it says, is complicated—hinging on whether other importers like China or buyers of Iranian oil will face similar penalties.
Even in an oversupplied market, any aggressive enforcement could jolt the balance. Scotiabank estimates a global oil surplus of 1 million barrels per day in the second half of 2025, widening to 2 million in early 2026. These forecasts assume Russian exports remain steady and Iranian output drops modestly.
But if penalties choke off Russian oil sales or ripple into Iran, all bets are off. According to IEA data cited in the report, Russia exported 6.7 million barrels per day in 2Q25. Iran’s exports hovered near 1.5 million. Any disruption to those flows—particularly to high-demand buyers like India—could sharply alter global supply and price dynamics.
While the US-India trade deal is still under negotiation, Scotiabank says the current uncertainty alone could start reshaping oil trade flows. The bank’s take on the development: *“Positive”—*presumably for North American producers, who could benefit from tighter global supply and redirected demand.
A threat from President Trump to slap an unspecified penalty on countries importing Russian oil—specifically India—has injected new volatility into the global energy market, Scotiabank warns.
With India now one of the largest buyers of Russian crude, the move could ripple far beyond geopolitics and into oil supply chains worldwide.
In a note, Scotiabank analysts said the Trump administration’s surprise threat comes on the back of a 25% tariff on Indian goods and a 10-day ultimatum for Russia to broker a ceasefire with Ukraine. While no concrete penalty has been defined, the potential enforcement has already raised alarm among oil traders.
India has ramped up Russian crude imports from virtually zero to nearly 2 million barrels per day since the war began—making Russia its largest oil supplier and positioning India as one of Moscow’s top two customers.
“Will India be able to replace oil imported from Russia?” Scotiabank asks. The answer, it says, is complicated—hinging on whether other importers like China or buyers of Iranian oil will face similar penalties.
Even in an oversupplied market, any aggressive enforcement could jolt the balance. Scotiabank estimates a global oil surplus of 1 million barrels per day in the second half of 2025, widening to 2 million in early 2026. These forecasts assume Russian exports remain steady and Iranian output drops modestly.
But if penalties choke off Russian oil sales or ripple into Iran, all bets are off. According to IEA data cited in the report, Russia exported 6.7 million barrels per day in 2Q25. Iran’s exports hovered near 1.5 million. Any disruption to those flows—particularly to high-demand buyers like India—could sharply alter global supply and price dynamics.
While the US-India trade deal is still under negotiation, Scotiabank says the current uncertainty alone could start reshaping oil trade flows. The bank’s take on the development: *“Positive”—*presumably for North American producers, who could benefit from tighter global supply and redirected demand.