New Delhi, Oct 25: Analysts say that U.S. President Donald Trump’s sanctions on two major Russian oil companies could force Indian refiners to reduce their dependence on Russian crude — a move that might increase costs.

Trump recently claimed that Indian Prime Minister Narendra Modi had agreed to cut Russian oil imports as part of a potential U.S.–India trade deal, though New Delhi has not officially confirmed the statement.

Relations between the two nations have been strained since August, when Washington imposed a 50% tariff on Indian exports. U.S. officials accuse India of indirectly funding Russia’s war in Ukraine by purchasing discounted oil from Moscow.

“The key question is how much Prime Minister Modi has bowed to American wishes. In the initial response, state oil companies are looking more cautious,” said Jorge Montepeck of ONYX Capital, adding that oil prices have already risen by over 5% following the U.S. sanctions.

Russian crude currently makes up about 34% of India’s total oil imports, offering significant discounts to local refiners. Data from Kepler shows that India imported more than 1.6 million barrels per day from Russia in September.

“If necessary, Indian refiners can shift to other suppliers, but that will pressure refining margins and raise import bills,” said Vandana Hari, an oil market analyst based in Singapore.

Despite tensions, both nations continue trade negotiations. “Talks with Washington are progressing, and we hope to reach a fair and just agreement soon,” said Indian Trade Minister Piyush Goyal.

However, Nomura analysts warned that the short-term costs of reducing Russian oil dependence could outweigh the benefits of lowering U.S. tariffs.