NEW DELHI, Aug 27 (Reuters) - India, the world's

third-biggest oil importer and consumer and the largest buyer of

Russian seaborne crude, is caught in the crossfire of diplomatic

negotiations between Russia and the United States to end the war

in Ukraine.

WHY HAS TRUMP IMPOSED ADDITIONAL TARIFFS ON INDIAN GOODS?

An additional 25% duty by President Donald Trump takes total

tariffs on Indian goods to as much as 50% from Wednesday, among

Washington's highest, in retaliation for New Delhi's increased

buying of Russian oil.

White House trade adviser Peter Navarro said India's

purchases of Russian crude were funding Moscow's war in Ukraine

and had to stop.

This month, Treasury Secretary Scott Bessent said India was

profiteering from its sharply increased imports, making up 42%

of total oil purchases, versus less than 1% before the war, a

shift Washington has called unacceptable.

Trump's strategy is in a sharp contrast to the former Biden

administration, which had welcomed India's Russian oil purchases

in order to help keep global oil prices, which hit a

peak of $139 a barrel in 2022, in check.

WHY INDIA IS BUYING RUSSIAN OIL?

India and China have become the biggest Russian oil buyers

since the Ukraine war broke out in 2022 and Western nations

shunned energy imports from Moscow and imposed price caps on

Russian oil trade. However, there is no blanket prohibition on

the purchase of Russian oil if the deals meet parameters of the

Western sanctions.

The Indian government aims to reduce its massive crude oil

import bill and provide energy at affordable rates to its 1.4

billion citizens. Additionally, the import of discounted Russian

oil has allowed India to diversify from more expensive Middle

Eastern grades.

India has said its national interests will guide its energy

import policies. The country imports over 85% of its total oil

requirements for its refining capacity of 5.2 million barrels

per day.

WILL INDIA CONTINUE TO BUY RUSSIAN OIL?

For now, India is unlikely to stop importing Russian oil due

to energy security, people familiar with the matter said.

However, India's imports of Russian oil are expected to fall

in September from August, after state refiners paused their

purchases due to smaller discounts, according to LSEG trade flow

data.

India's Russian oil imports are expected to remain subdued

as state-refiners are not keen to buy at reduced discounts and

are instead scouting for only distressed cargoes, said Indian

refining sources.

Discounts for Russian Urals crude delivered to India have

narrowed to about $2.50 per barrel to dated Brent, trade sources

said, versus discounts of $20-$25 per barrel when the war began

in February 2022.

India officials said it is difficult to replace Russian oil

supplies as the cost of replacement barrels will rise

significantly.

HOW MUCH OIL DOES INDIA BUY FROM RUSSIA?

India imported 1.73 million bpd of crude from Russia between

January and July, accounting for more than a third of India's

total imports, trade data showed.

Previously, Russian oil made up only a small fraction of

India's overall imports due to logistical constraints, including

costly and longer shipping routes.

India reduced its crude intake from Middle Eastern and

African nations after increasing Russian imports.

WHO ARE THE TOP BUYERS OF RUSSIAN OIL IN INDIA?

Indian private refiners Reliance Industries and

Nayara Energy are the top buyers of Russian oil. Reliance

operates the world's largest refining complex, while Nayara is

majority owned by Russian entities, including Rosneft.

Reliance has a term contract with Rosneft, India's

largest oil import deal with Russia. Together, the two companies

account for about 60% of India's total Russian oil imports.

In contrast, state-run refiners purchase Russian oil from

the spot market on a delivered basis.

ALTERNATIVES TO RUSSIAN OIL

Indian companies have raised crude imports from the U.S. and

the Middle East in recent months to replace Russian supply.