For the first time in 18 months…, is Trump’s trade tariff finally taking a toll on India? Check where the decline happened

India, the world’s third-largest importer and consumer of oil, saw a notable dip in demand, with crude imports falling 4.3% year-on-year to 18.56 million tons in July 2024, according to data from the Petroleum Planning and Analysis Cell.

India’s crude oil imports dropped 8.7 per cent in July, falling to 18.56 million metric tons compared to the previous month. According to government data, this is the lowest level since February 2024, marking an 18-month low. Being the world’s third-largest oil importer and consumer, such numbers are seen as a key indicator of fuel demand in the country.

Data from the Petroleum Planning and Analysis Cell (PPAC) also showed that, on a yearly basis, crude oil imports were down 4.3 per cent in July 2024, compared to 19.40 million tons a year earlier. Imports of petroleum products also fell 12.8 per cent year-on-year to 4.31 million tons, while exports of petroleum products slipped 2.1 per cent to 5.02 million tons.

The Oil Ministry added that India’s fuel consumption in July declined 4.3% to 19.43 million tons.

Impact of Tariffs

From August 27, the US will impose an additional tariff of up to 50 per cent on Indian goods. Washington had already placed a 25 per cent duty on many Indian products, much higher than the tariffs on several other major trading partners. The U.S. claims this move is linked to India’s continued purchase of Russian oil.

According to Reuters, UBS commodity analyst Giovanni Staunovo suggested that the threat of U.S. tariffs may have influenced India’s oil imports last month, possibly causing a dip in purchases.

Continued Russian Oil Purchases

Despite this, Indian state refiners like Indian Oil and Bharat Petroleum have resumed buying Russian oil for delivery in September and October, taking advantage of deeper discounts.

Shipping data and LSEG flows also indicate that Nayara Energy, which has ties to Russia and is under EU restrictions, relies on the “dark fleet” — ships that hide their identity — to import crude and transport refined fuels.

HIGHLIGHTS

1. India’s crude oil imports fell 8.7% in July, dropping to 18.56 million metric tons, the lowest level since February 2024.
2. On a yearly basis, imports were also down 4.3% compared to 19.40 million tons in July 2023, according to PPAC data.
3. Starting August 27, the US will raise tariffs on Indian goods up to 50%, on top of the existing 25% duty, which is higher than what many other trade partners face.
4. Despite trade tensions, Indian Oil and Bharat Petroleum have resumed Russian oil purchases for September and October deliveries, taking advantage of bigger discounts.