US and India Forge New Trade Deal, India to Reduce Russian Oil Reliance
The United States and India have reached a trade agreement that will see the US lower tariffs on Indian goods to 18%, a significant reduction from the previous rate of 25%, and potentially 50% in some cases. This deal comes with a commitment from India to reduce its purchases of Russian oil and increase imports from the US and, potentially, Venezuela, according to announcements made by President Donald Trump on Monday, February 2, 2026.
Trump announced the agreement on his Truth Social platform, stating that Prime Minister Narendra Modi agreed to “stop buying Russian Oil, and to buy much more from the United States and, potentially, Venezuela.” He framed the move as potentially helping to “END THE WAR in Ukraine,” where thousands are reportedly dying each week.
The tariff reduction is effective immediately, as per Trump’s announcement, and India will reportedly move forward to reduce its tariffs and non-tariff barriers against the United States to zero. Modi confirmed the reduced tariff rate on X, expressing gratitude to President Trump on behalf of India’s 1.4 billion people and highlighting the benefits of cooperation between the world’s largest democracies.
India had been one of Russia’s largest crude oil customers, a situation that strained the US-India relationship. Last August, Trump doubled duties on imports from India to 50% in an effort to pressure New Delhi to curb its purchases of Russian oil. The White House has now confirmed that the additional tariff will be scrapped.
While Modi did not explicitly mention halting Russian oil purchases in his public statement, an unnamed Indian government official cited by Reuters confirmed that US petroleum supplies were included in the agreement. India has already begun to cut its reliance on Russian crude, with shipments dropping by nearly a third to 1.3 million barrels per day in recent weeks, according to Indian Oil Minister Hardeep Singh Puri.
However, fully replacing Russian oil imports with US crude is expected to be a gradual process, potentially taking months or years. Russia currently supplies around a quarter of India’s total oil imports, which amount to roughly 5 million barrels per day. A complete shift to US crude could increase India’s oil import bill by $9 to $11 billion annually, as Russian oil is heavily discounted.
The logistical challenges of importing US crude are also significant. The voyage from the US Gulf Coast to India takes over six weeks and relies on a US export system already operating near capacity. Indian refineries are optimized for heavier, sour Russian Urals crude, requiring operational adjustments to process lighter, sweeter US crude.
Trump also suggested that Venezuela could play a role in supplying India’s oil needs, potentially reviving the Latin American nation’s oil sector following a recent deal between Venezuela’s interim government and Washington to sell up to 50 million barrels of crude to US refiners. Venezuela’s oil output, however, is currently a fraction of its former levels, hovering around 900,000 barrels per day compared to 3 to 4 million barrels in the early 2000s, and would require substantial investment to increase significantly.
The impact on global oil supplies is expected to be limited and gradual, as India will need to honor existing contracts for Russian crude. China, Turkey, and African nations are predicted to increase their purchases of Russian oil. Global oil flows currently remain near balanced, with OPEC+ members and emerging sources like Brazil, Guyana, and Argentina contributing to a surplus.
Trump indicated that India could purchase $500 billion worth of US energy, coal, technology, agricultural, and other products as part of the broader trade deal.
