Washington/New Delhi, Jul 30 (PTI) From just 0.2 per cent before the Russia-Ukraine war to now accounting for 35-40 per cent of total crude imports, India's reliance on Russian oil has surged -- drawing fresh scrutiny with US President Donald Trump announcing a penalty on top of a 25 per cent tariff, or tax, on all goods going to the US.

India historically bought most of its oil from the Middle East, including Iraq and Saudi Arabia. However, things changed when Russia invaded Ukraine in February 2022.

India, the world's third-largest crude importer after China and the US, began snapping up Russian oil that was available at a discount after some in the West shunned it as a means to punish Moscow for its invasion of Ukraine.

From a market share of just 0.2 per cent in India's import basket before the start of the Russia-Ukraine conflict, Russia overtook Iraq and Saudi Arabia to become India's No.1 supplier, with a share as high as 40 per cent at one point of time.

This month, Russia supplied 36 per cent of all crude oil, which is converted into fuels like petrol and diesel, that India imported.

Announcing imposition of 25 per cent tariff or tax on all Indian goods going to the US, Trump said New Delhi "always bought a vast majority of their military equipment from Russia, and are Russia's largest buyer of energy, along with China, at a time when everyone wants Russia to STOP THE KILLING IN UKRAINE." "India will therefore be paying a tariff of 25 per cent, plus a penalty for the above (Russian purchases), starting on August First," he said in a post on social media.

India bought 68,000 barrels per day of crude oil from Russia in January 2022, according to global real-time data and analytics provider Kpler. That month, Indian imports from Iraq were 1.23 million bpd and 883,000 bpd from Saudi Arabia.

In June 2022, Russia overtook Iraq to become India's largest oil supplier. That month it supplied 1.12 million bpd as compared to 993,000 bpd that came from Iraq and 695,000 bpd from Saudi Arabia.

Russian imports peaked to 2.15 million bpd in May 2023 and have varied --depending upon the discount at which the oil was available. But the volumes never slipped below 1.4 million bpd, which is more than what India was buying from its top supplier Iraq before the Russia-Ukraine conflict.

This month, imports from Russia have averaged 1.78 million bpd, almost double of 900,000 bpd imports from Iraq. Saudi imports stood at 702,000 bpd, according to Kpler.

After the Ukraine war, western energy sanctions against Russia pushed it to cut prices for those buyers still willing to purchase its crude.

The discounts on Russia's flagship Urals crude to Brent -- the world's most known benchmark -- was as high as USD 40 per barrel at one point but have been trimmed since to less than USD 3.

G7 countries in December 2022 imposed a USD 60 per barrel price cap on Russian crude. Under the mechanism, European companies were permitted to transport and insure shipments of Russian oil to third countries as long as it is sold below the capped price -- an effort to limit the impact of the sanctions on global oil flows but ensure Russia earns less from the trade.

This month, the European Union decided to lower the price cap to USD 47.6 and introduced an automatic and dynamic mechanism for its review in the future. The idea being to keep the cap at 15 per cent lower than the average market price.

In addition to stoking India's economy, cheap Russian oil gave refiners lucrative business -- refining that crude and exporting the products to deficit countries.

These included the European Union, which had banned direct crude oil purchases from Russia.

The bulk of the crude that goes to India from Russia arrives at ports in Gujarat, where Reliance Industries Ltd's Jamnagar refinery, the largest in the world, and Nayara Energy-owned India's second-largest refinery less than 10 miles away at Vadinar turned them into fuel.

The Center for Research on Energy and Clean Air, a research group based in Finland, in a recent report highlighted the role of "laundromat" countries like India, China, and Turkey, which buy Russian oil, refine it into other products and sell it on to buyers in Europe, the United States and other jurisdictions that have halted direct purchases from Russia.

This month, the European Union decided to ban import of refined oil produced from Russian crude.

All through the Russia-Ukraine war, India has taken a neutral stance, balancing its economic and energy needs with diplomacy.

Oil Minister Hardeep Singh Puri has repeatedly stated that global oil prices would have shot up sharply if India had not bought Russian oil. The logic being, if oil from a large supplier like Russia went off the shelf, it would have created pressure on other supplies and led to spike in prices.

External Affairs Minister S Jaishankar, too, has stated that it is a sensible policy to go where the best deals are available in the interest of the Indian people. "If it is your contention that our position has been in putting the interests of the Indian public first, I plead guilty," he had said in the past. PTI ANZ TRB

Trade tariff on imports imposed as response to continued purchases of Russian crude, raising export compliance risks for suppliers. The United States announced a 25 per cent tariff plus an additional penalty on Indian goods linked to India's ongoing purchases of Russian crude, framing the measure as a response to India's energy and military procurement connections with Russia. Concurrently, multilateral measures including a price cap mechanism on Russian crude and an EU ban on refined products from Russian oil create compliance obligations for purchasers, refiners and shippers, while Indian refiners process significant volumes of discounted Russian crude for domestic use and export.