India replaced about 73% of its lost Gulf crude, but total imports still fell 11%

The Senate approved H.R. 5334H.R. 5334A House-originated education-tax bill that the Senate used as the legislative vehicle for its Russia and Iran sanctions package. https://www.govinfo.gov/app/details/BILLS-119hr5334pcs as amended on August 7 by 86 votes to 11. The original House bill concerned a tax deduction for early-childhood educators; the Senate used it as the vehicle for the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026. Because the House has not approved the Senate's replacement text, the package is not law and the vote did not add a new tariff to Indian goods. https://www.govinfo.gov/app/details/BILLS-119hr5334pcs https://www.senate.gov/legislative/LIS/roll_call_votes/vote1192/vote_119_2_00224.htm https://apnews.com/article/senate-russia-sanctions-graham-tariffs-8d37498c3f27d96cae7da147250ebe9f

Section 113Section 113The part of the Senate package that would authorize duties on goods from specified major buyers of Russian oil or gas and countries facilitating Russian oil sanctions evasion. https://www.blumenthal.senate.gov/imo/media/doc/2026-07-27_bill_text.pdf says that, no later than 30 days after enactmentenactmentThe point at which a bill completes the required legislative process and becomes law., the president would increase duties on goods from a qualifying country to a rate of up to 100% by value. The rate would be added to duties already applicable. A qualifying energy buyer must knowingly make new purchases of Russian-origin crude oilcrude oilUnrefined petroleum that a refinery processes into fuels and other products. or natural gas at least 30 days after enactment and rank among the five largest importers by volume during the preceding 12 months. The provision also covers the five leading countries facilitating Russian oil sanctions evasionsanctions evasionConduct designed to hide, reroute or restructure a transaction so that it avoids an applicable sanctions rule.. https://www.blumenthal.senate.gov/imo/media/doc/2026-07-27_bill_text.pdf

The wording does not automatically select a 100% rate. It requires a rate no higher than 100%, allows later adjustments, requires written justification before a duty is imposed or changed, provides a limited natural-gas exception and lets the president waive a duty after certifying to Congress that the waiverwaiverOfficial permission to suspend a legal requirement for a specified person, transaction or circumstance. is in the U.S. national interest. https://www.blumenthal.senate.gov/imo/media/doc/2026-07-27_bill_text.pdf

KSE Institute divided the data into February-April 2026, the first three full months after an EU refined-product restriction took effect, and the preceding November-January period. It reported that India's total crude imports averaged 4.51 million barrels a daymillion barrels a dayA measure of oil flow equal to one million barrels every day, commonly abbreviated as mb/d. in February-April, 11% below the preceding period. Gulf-origin imports fell 55%, from 3.85 million to 1.75 million barrels a day. https://institute.kse.ua/wp-content/uploads/2026/06/kse_refining_loophole_eng_june_2026.pdf

The earlier total is not printed as a level in that passage, but it can be inferred from the reported decline: 4.51 divided by 0.89 equals approximately 5.07 million barrels a day. Subtracting Gulf-origin crude leaves about 1.22 million barrels a day from other origins before the disruption and 2.76 million during it. Other-origin supply therefore rose by roughly 1.54 million barrels a day while Gulf-origin supply fell by 2.10 million. The ratio, about 73%, is the article's central finding. https://institute.kse.ua/wp-content/uploads/2026/06/kse_refining_loophole_eng_june_2026.pdf

That 73% is an accounting offset, not a causal estimate. It does not show that each additional non-Gulf barrel was ordered specifically to replace one missing Gulf barrel. It shows that the non-Gulf side of India's import ledger expanded by about three-quarters as much as the Gulf side contracted, while the total ledger still shrank. https://institute.kse.ua/wp-content/uploads/2026/06/kse_refining_loophole_eng_june_2026.pdf

A simple analogy is a supermarket that loses four delivery trucks from its usual supplier and finds three trucks elsewhere. The substitution is substantial, but the shelves still receive one fewer truck. India's data show the same shape: a large switch in origin alongside a smaller overall supply.

The 11% fall in total imports is consistent with a near-term physical constraint, but it does not prove that shipping disruption was the only cause. Imports can also move with refineryrefineryAn industrial facility that converts crude oil into products such as gasoline, diesel and jet fuel. maintenance, demand, inventories, cargo timing and commercial decisions. KSE itself describes the Russian increase and Gulf contraction as evidence of partial substitution, while acknowledging overlapping sanctions and market pressures. https://institute.kse.ua/wp-content/uploads/2026/06/kse_refining_loophole_eng_june_2026.pdf

The shipping evidence nevertheless confirms that the route was badly impaired. On February 28, Reuters reported that tanker owners, oil companies and traders had suspended crude, fuel and liquefied-natural-gas shipments through Hormuz after U.S. and Israeli attacks on Iran. Reuters also reported that traffic had not stopped completely. https://www.investing.com/news/commodities-news/oil-and-gas-majors-and-traders-suspend-shipments-via-hormuz-as-us-attacks-iran-sources-say-4533427

The latest available count shows only a partial recovery. Lloyd's List Intelligence recorded 84 vessel transits during July 27-August 2, up from 45 in the preceding week but far below more than 700 in a typical pre-crisis week. Those figures cover vessels generally, not just tankers, so they establish severe traffic disruption without directly measuring barrels of oil. https://apnews.com/article/mideast-news-roundup-iran-lebanon-israel-aug-6-2026-07074f3374339a34bc539f56d7d6287a

This is the first limit on tariff leverage. A tariff can change the financial appeal of trading with India, but it cannot make an unavailable cargo appear, shorten a voyage or restore safe passage through a constrained waterway. That is an inference from the tariff's border-tax mechanism and the observed shipping and import data, not an estimate of how India would respond to a particular rate. https://www.help.cbp.gov/s/article/Article-1643?language=en_US https://institute.kse.ua/wp-content/uploads/2026/06/kse_refining_loophole_eng_june_2026.pdf https://apnews.com/article/mideast-news-roundup-iran-lebanon-israel-aug-6-2026-07074f3374339a34bc539f56d7d6287a

India's Russian crude imports were reported at about 1.10 million barrels a day, or 21.2% of total imports, in January. Reuters industry data put March arrivals at a record 2.25 million barrels a day, about half of India's crude purchases. Kpler data reported by Financial Express put June at 2.61 million barrels a day and 52.4%. https://www.indiatoday.in/india/story/russia-to-ship-95-million-oil-barrels-to-india-to-help-manage-supply-crisis-2877415-2026-03-04 https://www.sahmcapital.com/news/content/table-indias-march-russian-oil-imports-rose-to-record-on-middle-east-supply-hit-data-shows-2026-04-21 https://www.financialexpress.com/policy/economy/russian-crude-imports-surge-39-to-2-61-million-bpd-make-up-52-of-indias-june-oil-intake/4281852/

Those observations do not form a clean policy experiment. The United States imposed an additional 25% duty on specified Indian goods effective August 27, 2025, sanctioned Rosneft and Lukoil on October 22, removed the India-specific duty effective February 7, 2026, and issued a license on March 12 covering specified transactions involving Russian-origin oilRussian-origin oilOil extracted in Russia even if it is later resold, transferred between ships or exported through another jurisdiction. loaded by that date. The Hormuz disruption began between the tariff removal and the license. https://public-inspection.federalregister.gov/2025-16419.pdf https://ofac.treasury.gov/recent-actions/20251022 https://www.federalregister.gov/documents/full_text/html/2026/02/11/2026-02818.html https://ofac.treasury.gov/recent-actions/20260312_33 https://www.investing.com/news/commodities-news/oil-and-gas-majors-and-traders-suspend-shipments-via-hormuz-as-us-attacks-iran-sources-say-4533427

Producer sanctions, the earlier tariff, its removal, temporary licensing, the loss of Gulf supply, Russian discounts and ordinary commercial decisions therefore changed at overlapping times. A rise in Russian share after February cannot by itself show that removing the tariff caused the rise, that Hormuz caused all of it or that tariffs are ineffective. Establishing any of those claims would require a defensible counterfactualcounterfactualAn estimate of what would probably have happened without the policy or disruption being studied. for what India would have bought without each event.

U.S. Customs and Border Protection requires the importer of recordimporter of recordThe person or business legally responsible for an imported shipment, its customs paperwork and its duties. https://www.help.cbp.gov/s/article/Article-1643?language=en_US to deposit estimated duties when goods enter the United States. The legal charge is therefore collected from the importer, even though contracts, prices and supply-chain responses can redistribute the ultimate cost. https://www.help.cbp.gov/s/article/Article-1643?language=en_US

Research on the 2018 U.S. tariffs found complete pass-throughpass-throughThe portion of a new cost that a business transfers into the price charged to its customer. into domestic prices of affected imports during the period studied, with the measured incidence falling on U.S. importers and consumers. That historical result explains why lawmakers worry about domestic costs, but it cannot be mechanically applied to a different set of countries, products and tariff rates in 2026. https://www.aeaweb.org/articles?id=10.1257%2Fjep.33.4.187

Section 113 could still create substantial leverage by making Indian goods more expensive in the U.S. market and increasing the commercial cost of continued Russian purchases. What India's substitution record shows is narrower: if non-Russian supply and safe delivery routes cannot fully replace lost Gulf barrels, India would face a physical constraint alongside the trade penalty. The data do not reveal which pressure would dominate. https://www.blumenthal.senate.gov/imo/media/doc/2026-07-27_bill_text.pdf https://institute.kse.ua/wp-content/uploads/2026/06/kse_refining_loophole_eng_june_2026.pdf

Russian market sharemarket shareThe percentage of a market supplied by one seller or source. is an incomplete measure because it depends on both Russian volume and India's total imports. A supplier's share can rise when its own deliveries are unchanged but competing deliveries fall. Conversely, share can fall even while the supplier sells more if the total market grows.

Volume and revenue can also move in opposite directions. CREA estimated that worldwide Russian crude export volume rose 14% from May to June while estimated crude revenue fell 8% to EUR 348 million a day. CREA uses a pricing model and revises shipment information as data are verified, so these are estimates rather than audited Russian receiptsreceiptsThe estimated money a seller receives, determined by both the quantity sold and the price.. https://energyandcleanair.org/june-2026-monthly-analysis-of-russian-fossil-fuel-exports-and-sanctions/

A credible future evaluation of Section 113 should therefore answer four separate questions: Did India's Russian volume fall? Did Russia receive less money after changes in prices and discounts? Did India's total crude supply remain adequate? Were the displaced Russian barrels removed from world trade or redirected to another buyer? None of the existing evidence answers all four.

• Russian volume tests whether India's physical purchases changed.
• Estimated Russian receipts test whether the policy reduced the seller's income.
• India's total imports test whether substitution preserved energy supply.
• Purchases by other countries test whether Russian barrels were diverted rather than removed from the market.

India's February-April record supports a bounded conclusion. As Gulf-origin crude declined by 2.10 million barrels a day, other-origin crude increased by an estimated 1.54 million. That was enough to replace about 73% of the decline, but not enough to prevent total imports from falling 11%. https://institute.kse.ua/wp-content/uploads/2026/06/kse_refining_loophole_eng_june_2026.pdf

The proposed tariff could add strong financial pressure if the House passes the Senate package, the president signs it and the administration applies Section 113 to India. India's experience does not show that such pressure would fail. It shows that policymakers cannot evaluate the tariff as though alternative crude and shipping capacity were unlimited. https://apnews.com/article/senate-russia-sanctions-graham-tariffs-8d37498c3f27d96cae7da147250ebe9f https://www.blumenthal.senate.gov/imo/media/doc/2026-07-27_bill_text.pdf https://apnews.com/article/mideast-news-roundup-iran-lebanon-israel-aug-6-2026-07074f3374339a34bc539f56d7d6287a

The answer to the article's question is therefore conditional. While Hormuz remains constrained, a U.S. tariff can change India's cost-benefit calculation, but it cannot remove the near-term supply constraint that made Russian and other non-Gulf barrels valuable. Success must be judged by Russian receipts and displaced volume without ignoring India's total supply or diversiondiversionThe redirection of oil from one buyer, destination or shipping route to another. elsewhere.