Oil Trade and Tariffs Shape Russia Sanctions Waiver

President Donald Trump’s Friday executive order waived sanctions and tariffs on India’s purchases of Russian oil, suspending penalties intended to pressure Moscow. The order removes tariffs that could have reached 100% on Indian goods, along with penalties tied to Russian oil and gas purchases. Trump said the waiver served the U.S. national interest and would keep Moscow at the bargaining table.

Oil, Tariffs and Trade

India ranks among the five largest importers of Russian oil and is the world’s third-largest oil importer and consumer. Russia supplied nearly half of India’s oil imports earlier this year, though purchases dropped in August and kept declining. The tariff threat put trade in Indian goods and access to Russian energy into the same policy dispute.

Last month, India’s government warned that the proposed tariffs could damage relations with the United States, adding diplomatic strain and uncertainty over trade. If India kept cutting Russian oil imports to avoid U.S. tariffs, fuel prices could rise ahead of regional elections, or government finances could come under strain. The waiver eases that pressure, but trade talks remain unfinished.

U.S. Secretary of State Marco Rubio said trade talks figured among the considerations in Trump’s decision. “We are trying to finalise a trade deal with India right now and we are very close to doing that. So, that's one of the things we take into consideration when the President makes a decision about national security waivers,” Rubio told reporters in Uzbekistan on Monday.

Rubio added, “For some countries it is very difficult to acquire energy from alternative sources.” During his two-day India visit, he was due to meet foreign minister S. Jaishankar on Tuesday to discuss bilateral cooperation, including energy, trade and investment, and defence.

The U.S. and India had discussed a trade agreement for months, but it remained unfinished, partly because negotiations stalled over the new tariff threat. A U.S. Section 301 trade investigation into several countries, including India, over alleged excess manufacturing capacity also remained incomplete. Section 301 allows the United States to retaliate against unfair foreign trade practices.

Earlier this month, India joined a U.S.-led initiative against structural overcapacity with several other nations. Last week, trade officials in New Delhi said an agreement was nearly done and voiced optimism about securing a tariff lower than those imposed on competing countries, a longstanding Indian expectation.

Sanctions as Bargaining Power

Michael Kugelman, a senior fellow at the Atlantic Council in Washington, said pausing sanctions could give the two countries room to complete trade negotiations. He called the waiver “the confidence-building measure that gives the two sides the negotiating space to get over the final hump.” The decision followed fresh tensions over the sanctions bill and new U.S. visa policies.

Trump defended the waiver on Truth Social on Sunday, saying he didn’t want to “drive, foolishly, Russia away from the bargaining table.” He said, “Great progress is being made, and that includes current hostage negotiations!” Trump also said Russia was doing “very little, if anything, to help the Islamic Republic of Iran” and that he wanted to keep it that way.

The sanctions package aimed to pressure the Kremlin to end its military operations, imposing tariffs on top purchasers of Russian energy and on those helping Russia evade sanctions. Trump’s waiver suspends those measures as he negotiates an end to the war between Russia and Ukraine.

Ukraine Bears the Dispute

Ukrainian President Volodymyr Zelenskyy said waiving sanctions “will hurt Ukraine” and strengthen Russian President Vladimir Putin’s war effort. “He's [an] aggressor. He occupied us. He killed adults and children, his soldiers. He's a terrorist,” Zelenskyy told NBC's Meet the Press on Sunday.

Trump accused Zelenskyy of refusing to end the war and said Ukrainian attacks on Russian diesel refineries were “seriously hurting the world diesel markets,” including those in the United States. Zelenskyy said Ukraine trusted Trump and that it would be “unbelievable” for the United States to support Putin over him.

On October 9, Trump announced that Russia would supply more than 300,000 metric tonnes of diesel to U.S. and global markets to address fuel prices that had risen since the United States and Israel launched a war on Iran in late February. The move followed Tehran’s effective closure of the Strait of Hormuz, which had carried one-fifth of global energy exports before the war. Russia and Ukraine kept striking each other’s energy sites while Zelenskyy spoke with U.S. presidential envoys Steve Witkoff and Jared Kushner. Moscow’s strikes left thousands without power.