&w=3840&q=100)
Trump's Russia threat puts spotlight on India, China crude oil imports
Bloomberg
By Yongchang Chin
President Donald Trump's threat to impose financial penalties on Russia has put the spotlight on the two biggest buyers of Moscow's crude — India and China — but markets remain skeptical of disruption, for now.
India became a major importer of Russian oil since the invasion of Ukraine in early 2022. More than a third of overall purchases have been from the Opec+ producer this year, compared with less than 1 per cent prior to the war, according to data from Kpler. China's imports have also climbed over the same period.
Still, the initial reaction from the market to Trump's remarks was nonchalance. Global benchmark Brent fell almost 2 per cent to close below $70 a barrel on Monday, suggesting little concern around the potential impact to crude flows.
Trump said penalties would come in the form of 'secondary tariffs,' without providing details, and would be implemented in 50 days if Russia doesn't end hostilities with Ukraine. Matt Whitaker, the US ambassador to Nato, said the action effectively represents sanctions on nations buying Russian oil.
Whitaker specifically cited India and China.
Russian flows to India reached 2.1 million barrels a day in June, the biggest monthly intake in nearly a year, and close to the record set in May 2023, data from Kpler show. China's purchases haven't accelerated at the same pace, but have been consistently above 1 million barrels a day since the war.
'If push really comes to shove, and India cannot buy any crude oil from the Russian system, then India has optionality with the other Opec members,' said Mukesh Sahdev, head of commodity markets at Rystad Energy A/S. But 'it will be at a higher cost,' he added.
Barrels from the Middle East and Africa could help plug the gap of lost Russian supply, but the crude would be more expensive. Imports from Saudi Arabia in May were $5 a barrel higher than those from Russia, while shipments from Iraq were about 50 cents more pricey, according to official data from India's Ministry of Commerce and Industry.
Hashtags

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles

Economic Times
33 minutes ago
- Economic Times
Nayara Energy to invest Rs 70,000 cr in India; says EU sanctions go against India's interests
New Delhi, Russian oil giant Rosneft-backed Nayara Energy on Monday reaffirmed its plan to invest Rs 70,000 crore in downstream projects linked to its refinery, while denouncing the latest EU sanctions against it as unjust and harmful to India's interests. ADVERTISEMENT A day after Rosneft condemned sanctions on its Indian unit, Nayara Energy, as unjustified, illegal, and a direct threat to India's energy security, Nayara in a statement said the restrictions "risk disrupting the uninterrupted supply of petroleum products that are essential to millions of Indian citizens and industries". The European Union's 18th package of sanctions against Russia over its war in Ukraine was approved last week with a view to weakening its revenue sources. Nayara Energy was one of the companies that was sanctioned. "We categorically state that this unilateral move by the European Union is founded on baseless assertions, representing an undue extension of authority that ignores both international law and the sovereignty of India," Nayara said. The firm, which operates a 20 million tonnes a year oil refinery at Vadinar in Gujarat and over 6,750 petrol pumps in the country, went on to state that while many European countries continue to import Russian energy through various sources, "they take a high moral ground by chastising and sanctioning an Indian asset for processing Russian crude largely used by its domestic population of 1.4 billion Indians and businesses." "Such actions not only undermine India's interests, but also risk disrupting the uninterrupted supply of petroleum products that are essential to millions of Indian citizens and industries," it said, adding the company remains steadfast in its role as a reliable energy partner for India. ADVERTISEMENT "We urge all stakeholders to respect the principles of sovereignty and fair international conduct," it said. "We are actively exploring all legal and appropriate avenues to address this situation and to protect the interests of our operations, employees, and our stakeholders." Rosneft owns a 49.13 per cent stake in Nayara Energy Ltd, formerly Essar Oil Ltd. An investment consortium SPV, Kesani Enterprises Company, holds another 49.13 per cent stake in Nayara. Kesani is owned by Russia's United Capital Partners (UCP) and Hara Capital Sarl, a wholly-owned subsidiary of Mareterra Group Holding (formerly Genera Group Holding S.p.A.). ADVERTISEMENT "Nayara Energy strongly condemns the European Union's unjust and unilateral decision to impose restrictive measures on our company," the firm said in the statement. "Nayara Energy operates in full compliance with the laws and regulations of India." It said that as "an Indian company", it is "deeply committed to supporting the nation's energy security and fostering economic growth." ADVERTISEMENT "Our organization is governed by Indian law and proudly serves as a vital contributor to the country's energy infrastructure," it said. "Recently, Nayara Energy has come under international scrutiny, facing political pressures and the imposition of sanctions by the European Union which have no legal basis." Nayara said it "will continue to invest over Rs 70,000 crores in the long term towards petrochemicals, ethanol plants, marketing infrastructure expansion and refinery reliability including ESG projects." ADVERTISEMENT It however did not offer any further details of the projects. The company said since August 2017, it has invested over Rs 14,000 crores in various projects within India including upgrading existing refining facilities, investing in a new petrochemical plant and other new infrastructure projects. "Our operations are closely aligned with India's national priorities. Contributing approximately 8 per cent of the country's total refining capacity, 7 per cent of India's retail petrol pump network and estimated 8 per cent of polypropylene capacity while employing over 55000+ direct and indirect employees across the country, Nayara Energy remains at the cornerstone of India's energy security." Nayara said its "ongoing investments in domestic infrastructure, job creation, with continued investments in petrochemicals and retail network expansion underscores our unwavering commitment to the growing Indian market and to advancing the country's ambition of achieving energy self-sufficiency." Calling its mission 'In India, for India', the company said it primarily caters to the domestic market through India's largest private fuel retail network, institutional sales and partnerships with other oil marketing companies (OMCs). It went on to list its annual CSR budget of Rs 200 crore, tax payments (over Rs 2.5 lakh paid since August 2017), and compliance of applicable laws and regulatory frameworks. "Transparency, legal accountability, and constructive stakeholder engagement are cornerstones of our operations," it said. It reiterated commitment to ensuring no disruption to its daily operations. "We firmly believe that there is no impact whatsoever on Nayara Energy's interests, and we remain steadfast in our dedication to delivering value to our stakeholders," the statement added. (You can now subscribe to our Economic Times WhatsApp channel)


Indian Express
44 minutes ago
- Indian Express
Romania to buy Israeli anti-aircraft systems for $2.3 bln
Romania has signed a framework agreement to buy Israeli-made Shorad-Vshorad anti-aircraft systems for more than 2 billion euros ($2.3 billion), the Romanian defence ministry said on Monday. Under pressure from US President Donald Trump, Romania and other European countries have been looking to increase their defence spending since Russia's full-scale invasion of neighbouring Ukraine in 2022. The European Union and NATO member state, which shares a 650 km (400 mile) border with Ukraine, has had Russian drone fragments fall onto its territory repeatedly over the past two years as Moscow attacks Ukrainian port infrastructure. The framework agreement with the Israeli company Rafael Advanced Defense Systems – maker with US backing of Israel's Iron Dome defence system – provides for the signing of three further contracts, through which six integrated anti-aircraft systems will be acquired. The contracts will also cover training, ammunition and logistical support. The framework agreement will run for seven years, with the first two Vshorad systems to be delivered within three years of the signing of the first of the three further contracts, the ministry said.


Economic Times
an hour ago
- Economic Times
Tariff engineering: How companies are outsmarting Trump
Delta Air Lines pulled off an age-old trick on US President Donald Trump who has imposed steep tariffs on imports which are pinching American companies. Delta took brand-new Airbus jets sitting in Europe, yanked out their US-made engines, shipped those engines back to the States, and left the rest of the aircraft To avoid Trump's to a July 11 report by Bloomberg, Delta has been cannibalising new A321neo aircraft, assembled in Europe and fitted with Pratt & Whitney engines, for parts to keep its grounded US fleet flying. By removing the engines, which are manufactured in the US, and shipping them home separately, Delta avoids the 10% import duty levied on European-made aircraft under Trump-era trade policies. The planes themselves remain parked in Europe. They can't fly in the US yet anyway, their seats haven't cleared US regulatory certification. So instead of paying duties on entire aircraft, Delta is importing only the parts it needs, duty-free. CEO Ed Bastian was frank about the tactic. 'We are not planning to pay tariffs on aircraft deliveries,' he said during the company's latest earnings call, adding that Delta will continue using the workaround. Earlier this year, Delta routed new Airbus long-haul jets through Japan before bringing them into the US, another move to dodge import in 2020, the airline used similar tactics, redirecting deliveries through places like Amsterdam, Tokyo, and El Salvador to avoid tariffs during peak trade isn't a one-off. It's a workaround might look extreme, but it's hardly unusual. US companies across industries, from sneaker makers to car manufacturers, have been using similar strategies to avoid rising import duties. Call it tariff engineering or just smart loophole hunting. The goal is simple: cut import costs without breaking the law. And this is entirely Foote, a customs lawyer at Kelley Drye & Warren in Washington D.C., sees no issue with the practice. 'There is nothing inherently illegal or even untoward about leveraging strategic design choices that result in creating different products that are subject to different tariff classifications and duty rates,' he told CNBC. 'Tariff engineering is one of the few things you can do to try to get it right and reduce your duty liability.' What is tariff engineering? Tariff engineering is the art of designing or altering a product, legally, to qualify for a lower import tax. It doesn't mean cheating the system. It just means working within the rules and playing them to your advantage. Merritt v. Welsh (1882) Tariff engineering isn't new. One of the earliest examples dates back to the 1881 US Supreme Court case Merritt v. Welsh, when a sugar importer found that coating lighter sugar with molasses helped avoid higher tariffs. The case went all the way to the Supreme Court, which ruled that as long as the goods were honestly declared and inspected, there was nothing illegal about gaming the system. At the time, the US taxed sugar based on its colour, using something called the Dutch standard. Darker sugar = lower quality = lower what did the importer do? He took highly refined (white) sugar and added molasses to darken it. That way, it looked like low-grade sugar and qualified for a lower should've worked, until the Port of New York stepped customs office didn't buy it. They ran chemical tests, found the sugar had been intentionally darkened, and slapped on the higher tariff anyway. But the case reached the Supreme Court, and the justices sided with the importer. Why? Because the law at the time said tariffs had to be based only on colour, not chemical analysis or Matthews was of the opinion that even if the sugar was darkened on purpose, that wasn't illegal. 'Great stress is laid on the charge that sugars are manufactured in dark colors on purpose to evade our duties. Suppose this is true; has not a manufacturer a right to make his goods as he pleases?... If the duties are affected, there is a plain remedy. Congress can always adopt such laws and regulations as it may deem expedient for protecting the interests of the government.' Fast-forward to today, and tariff engineering is practically a full-time job for trade compliance teams across corporate America. Take Columbia Sportswear. They've been upfront about it. 'I have a whole team of people that work … with the designers and developers and merchandisers and with customs,' said Jeff Tooze, the company's VP of global customs and trade, in a 2019 interview with Marketplace. Their mission: bake tariff classification into the product design process. For instance, CNN reported that adding small zippered pockets below the waist on shirts is a simple tweak that can shift the product into a lower-duty category. That's how you end up with shirts sporting oddly placed zippers, designed not for fashion or function, but for tariff relief. Footwear brands play the same game. Converse, for instance, has been known to put felt soles on some All Star sneakers. The reason? Classification. Felt soles can move the shoes into the 'house slipper' category instead of 'athletic footwear', and house slippers come with significantly lower around the world use a system of more than 5,000 product classification codes to determine how much tariff to apply to imports, according to manufacturing the shoes overseas with felt soles, Converse can make a case to US customs that they qualify for the lower-duty category. It's not about aesthetics but a strategic design decision aimed at cutting costs. The loophole economy isn't just about design Sometimes, companies don't bother changing the product. They change the route. Or the label. Or where the product waits. Delta's stripped-down aircraft are one version of this. Another is the bonded of it as international limbo. Goods can enter the US and sit inside a government-regulated storage facility, as long as they remain locked up in a customs-regulated warehouse, for up to five years, duty-free, until the importer decides the timing is right to clear them through only pay the current tariff rate when they take goods out of storage. It's a bet that tariff rates will go down in the short or medium Hartry, who runs Howard Hartry, a customs brokerage by the Port of Los Angeles, says the demand for bonded warehouses has exploded since Trump's tariffs took hold. She told CNN that 95% of inquiries she receives now involve goods from no cap on the value a company can store in a bonded warehouse, the only real limit is physical to Hartry, her clients are stashing everything from lithium batteries and metal rods to TVs and treadmills. The value of these goods ranges between $37,000 and $500,000. She's well aware of how hard tariffs have hit her clients. But for her business, they've been a lifeline. 'It's saving our business, which we're grateful for,' she told CNN's Julia Vargas. Why all of this still works Despite the Trump administration's aggressive tariff hikes, loopholes remain. Sometimes products are explicitly exempt. Sometimes a lower rate applies if you swap a fabric or a metal. Other times, it's about knowing the right Harmonised Tariff Schedule (HTS) code, a system with over 5,000 lawyers are seeing a boom in business. Erik Smithweiss, a partner at GDLSK, said that companies come to his firm asking whether tweaks to their products might qualify them for a more favourable code.'We are working with companies who say, 'Gee, I really want to be on this list, look at my tariff codes,'' he told CNN. If the product can be modified, legally and substantially enough, his team will help make it tariff engineering has its limits, and pushing too far can backfire. Customs officials have the authority to test materials, scrutinise designs, and if they suspect deception, they can impose steep fines. Ford learned that the hard way The automaker was accused of sidestepping a steep 25% tariff, known as the 'chicken tax', by disguising cargo vans as passenger vehicles. The 'chicken tax' dates back to 1964, when the US imposed a 25% tariff on imported light trucks in retaliation for European restrictions on American workaround? Ford shipped Turkey-assembled Transit Connect vans to the US with temporary rear seats and minor interior tweaks, just enough to classify them as passenger vehicles and qualify for a much lower 2.5% import duty. Once the vans cleared customs, the seats were removed, and the vehicles were sold as cargo and Border Protection and the Department of Justice called it a clear attempt to dodge higher tariffs, saying the rear seats were never meant to carry passengers and were simply 'an artifice or disguise.'The case spanned years and involved hundreds of thousands of vans imported between 2009 and 2013. Courts consistently ruled in the government's favour. The Supreme Court refused to hear Ford's appeal in March 2024, Ford agreed to pay $365 million, roughly half in back duties, the rest in penalties. The company said it 'strongly disagreed with many of the characterisations' but chose to settle and end the legal battle. It did not admit fine is one of the largest customs penalty settlements in recent history. The risky business of skating the line Not all industries can play this game equally. Apparel and footwear can get by with easy tweaks and quick wins, but for aerospace, electronics, and medical devices, it's a completely different ballgame.'You might be looking at another 12 to 24 months of testing, certification, and validation in order to get that done,' said Andrew Wilson, a supply chain strategist at Supplino, to CNBC. That's time, money, and regulatory for many companies, the savings are worth it. Izzy Rosenzweig, CEO of logistics firm Portless, told CNBC that one of his clients switched hoodie production from synthetic to cotton to save 15% in duties. That's a serious margin in Industries, the RV giant, said earlier this year that it's actively working with trade experts to explore mitigation strategies, tariff engineering and deferrals it's not just the goods themselves. Even small tweaks to product add-ons can lead to big savings. Customs lawyer John Foote described to CNBC a lapel pin that was redesigned to include small pieces of cubic zirconia. That change moved it out of the 'festive article' category (14% tariff) into the 'jewellery' category (lower tariff). A small shift with a big game has rules. You just have to learn them. Tariff engineering is not fraud. But it is a tightrope walk. There's a fine line between clever strategy and misclassification. Companies can request a binding ruling from US Customs and Border Protection to confirm whether a classification will hold. But that comes with a risk: once you ask, you can't walk it back. If Customs disagrees, you're is why many firms prefer to stay just under the radar. Quietly adapting. Carefully designing. Relentlessly optimising.