The Russian niggle in the India-US trade deal amid the celebrations
India-US trade deal has been widely welcomed by markets and exporters, but one unresolved issue could yet test the durability of the deal, according to CreditSights, a Fitch company. India’s commitment to halt Russian oil purchases in return for sharply lower US tariffs carries economic and political risks that may surface once the initial euphoria fades. The India-US trade deal, announced by US President Donald Trump on Monday, will see Washington cut tariffs on Indian goods to 18% from 50%. In exchange, India has agreed to put zero tariff on US goods, lower trade barriers, halt purchases of Russian oil, and step up imports of oil and other goods from the US, and potentially Venezuela. India has confirmed the tariff reduction but has not commented publicly on the Russian oil aspect. However, Russia said it hasn’t received any communication from New Delhi indicating that India plans to stop buying Russian oil. Trump said India had committed to buying more than $500 billion worth of US energy, technology, agricultural and other products. A government official told Reuters on Tuesday that India has agreed to increase purchases of petroleum, defence goods, electronics, pharmaceuticals, telecom equipment and aircraft from the US. “Ceasing all Russian oil purchases and stepping up US/Venezuelan oil purchases will likely increase India’s oil import bill, given higher freight costs and sanctions on Russia (Russian oil typically trades $6-$10 per barrel lower than Brent); this could affect inflation and government oil subsidies, though we note that inflation remains well contained within the RBI’s 2%-6% tolerance band,” the Fitch company said.
US Crude Oil Inventories Take Big Hits In Storm Aftermath
The American Petroleum Institute (API) estimated that crude oil inventories in the United States decreased by 11.1 million barrels in the week ending January 30. Crude oil inventories decreased by 247,000 barrels in the week prior. Inventories in the US Strategic Petroleum Reserve (SPR) keep climbing week after week. The Department of Energy (DoE) reported that crude oil inventories in the SPR rose by 200,000 barrels to 415.2 million barrels in the week ending January 30. This is 310.3 million barrels shy of maximum capacity. US production fell for the fourth week in a row during the week of January 23 to 13.696 million bpd, down from 13.732 million bpd in the week prior, according to the latest EIA data. This is 456,000 bpd more than this same time last year. At 3:54 pm ET, Brent crude was trading up on the day at $68.10 (+2.71%). Brent is now roughly $0.70 per barrel up from this time last week as tensions in the Middle East persist. WTI was also trading up on the day, by $1.89 (+3.04%) at $64.03. Gasoline inventories rose this week, gaining 4.7 million barrels in the week ending January 30. In the week prior, gasoline inventories fell by 415,000 barrels. As of last week, gasoline inventories were 5% above the five-year average for this time of year, according to the latest EIA data. Distillate inventories fell in the reporting period by 4.8 million barrels, after gaining 2 million barrels in the week prior. Distillate inventories were 1% above the five-year average as of the week ending January 23, the latest EIA data shows. Cushing inventory—the inventory kept at the delivery hub for the WTI Crude futures contract—fell by 1.4 million barrels, after decreasing by 92,000 barrels in the prior week.
India to ramp up purchases of US oil, arms, aircraft; open some farm access
India has committed to purchasing petroleum, defence goods, electronics, pharmaceuticals, telecom products, and aircraft from the United States under a newly announced trade agreement, stated a report in Reuters, citing sources. The deal, following bilateral negotiations, is intended to address the US trade deficit with India and is expected to influence multiple sectors over the coming years, the report added. The official also noted that India has offered market access in some agricultural products, the report said, though details were not disclosed. US President Donald Trump confirmed the agreement, stating India agreed to “BUY AMERICAN at a much higher level” and could purchase up to $500 billion worth of US energy, coal, technology, agricultural, and other products. India has reduced tariffs on automobiles as part of the deal, responding to a key US request aimed at balancing bilateral trade. The Indian government official said these measures are part of broader efforts to address ongoing trade imbalances. Commerce ministry data showed India’s exports to the US rose 15.88 per cent year-on-year to $85.5 billion between January and November, while imports stood at $46.08 billion.
India’s crude import cost slips below $60 a barrel
India’s average crude oil import cost fell below $60 a barrel on Monday, among the lowest it has been in five years despite global geopolitical upheavals and sanctions against three major crude oil suppliers—Iran, Russia and Venezuela. The daily average price of various crude grades (popularly known as Indian basket) dipped to $59.29 a barrel on January 5. The last time, the daily average price of Indian basket stood below $60 was on February 5, 2021 (at $59.34). The Indian basket of crude oil represents a cocktail of sour grade and sweet grade of crude oil processed in Indian refineries. The research report prepared by the State Bank of India (SBI) said on Monday that crude oil prices would “soften significantly in 2026” to touch $50 per barrel by June 2026. The US Energy Information Administration (EIA) forecast a fall in oil prices to $55 a barrel in 2026. “We forecast the Brent crude oil price will fall to an average of $55 per barrel in the first quarter of 2026 and remain near that price for the rest of next year,” EIA’s short-term energy outlook said in its report published on December 9, 2025. Falling oil prices are good for India, which imports more than 88% crude oil it processes.
Indian refiners need wind-down period for Russian oil halt, sources say
Indian refiners will need a wind-down period to complete Russian oil deals before imports .from that country can be halted, and they have so far not been ordered by the government. Indian companies have already booked cargoes loading in February and arriving in March , so a wind-down period would be needed to fulfil existing commitments, the sources say .