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Observer
3 days ago
- Business
- Observer
What to know about India's trade in oil with Russia
NEW DELHI — For months, Indian and American trade officials haggled over things like tariffs and import quotas, trying to work out an agreement both sides could live with. President Donald Trump, intent on closing a $44 billion trade deficit with India, threatened to impose tariffs on Indian goods sent to the United States. Then, Trump brought Russia into it. On July 30, Trump said that Indian goods would be subject to a 25% tariff, a higher rate than its Asian competitors. He berated the country for its purchases of Russian energy, posting on social media that India was 'Russia's largest buyer of ENERGY, along with China. For that, Trump added, India would pay an unspecified penalty on top of the 25% levy. A day after saying he would 'substantially' increase the 25% levy, the president said on CNBC on Tuesday that he would impose higher tariffs on India in the next 24 hours. Plenty of other people and organizations had made similar arguments about how India was abetting Russia in its war on Ukraine by purchasing Russian oil. But now Trump had made it part of the U.S.-India trade talks. Along with dozens of other countries, India is facing the prospect of U.S. tariffs starting Thursday. Trump's demand, which India calls outrageous and unwarranted, has dropped like a stink bomb in the two countries' trade talks. Here's what you need to know about the dispute. Isn't Russia under sanctions? Moscow is under sanctions, primarily by the United States and the European Union. In an attempt to hurt Russia's war effort, the West imposed a cap on the price Russia could charge for its oil. But India did not sign on to that plan. After the sanctions were imposed and European and other markets shut their doors to Russia, seaborne exports to India from Russia started scaling up. On Tuesday, Russia pushed back against Trump's threats against India. Russia believes it is 'illegal' to try to 'get other countries to cut trade ties with Russia,' Dmitry Peskov, a Kremlin spokesperson, told Russian news agencies. China is another major buyer of Russian oil that did not join the sanctions effort. The country maintains particularly friendly relations with Russia, and trade between China and Russia is up two-thirds since Russia invaded Ukraine. Last year, their two-way trade exceeded $240 billion, with China sending everything from cars to drones. Other than China, no country is buying more Russian oil these days than India. It shows no sign of stopping, either. On Tuesday, Lloyd's List, the shipping industry's main trade journal, reported that three oil tankers made delivery at Indian ports over the weekend — after Trump had threatened to impose a penalty. How much Russian oil does India buy? Much more than it did before Russian President Vladimir Putin launched a full-scale invasion of Ukraine in February 2022. Shortly before the start of the war, crude oil from Russia accounted for 0.2% of how much India imports. By May 2023, Russia was selling India more than 2 million barrels of crude a day, or roughly 45% of its imports. India has bought a nearly constant flow of Russian oil for the past two years. Prices fluctuated, with total sales worth more than $130 billion per year. Iraq and Saudi Arabia, traditionally India's biggest suppliers, have been pushed to the side. In June 2023, an analysis of shipping data by The New York Times found that dozens of Russian tankers were arriving every month at Indian oil refineries. Why is India buying so much oil from Russia? Well, it's cheaper since sanctions have narrowed potential demand and held down the price. Another reason: India is not a major producer of oil, and it is the world's most populous nation and fastest-growing big economy. It needs a lot of oil. India's purchases of Russian oil have suited both sides. Russia can sell its crude oil, theoretically under a price cap the European Union had set at $60 a barrel, and India buys it at a discount. India's oil companies have refined some for domestic consumption and exported the rest to Europe and elsewhere as diesel and other products. In addition to helping power India's economy, cheap Russian oil has helped India establish a lucrative business exporting refined products to regions that need fresh energy supplies. One of India's refineries, the Jamnagar site on the country's west coast, is the largest in the world. The surge in imported Russian oil has helped to push up profits for companies such as Indian conglomerate Reliance Group, which runs the Jamnagar refinery. Reliance's stock price grew 34% since the war began, a period in which Exxon Mobil's has been flat. In recent weeks, refineries in India have been buying less Russian oil than usual, according to Kpler, which tracks commodities and shipping data. But to completely replace the Russian fuel it has been importing would be difficult for India, in part because its refineries are configured for the type of oil Russia produces. 'The pivot away from Russia — if forced — will be costly, complex and politically fraught,' Kpler wrote in a note. This article originally appeared in
Business Insider
08-07-2025
- Business
- Business Insider
World's 5th largest shipbuilder seals $637 million deal for offshore LNG plant in Africa
South Korea's Samsung Heavy Industries, the world's fifth-largest shipbuilder according to Lloyd's List, has secured a $637 million contract to construct a cutting-edge offshore liquefied natural gas (LNG) facility for a European client operating in Mozambique. Samsung Heavy Industries secured a $637 million contract to construct an FLNG facility in Mozambique to capitalize on its vast natural gas reserves. The facility will produce, liquefy, and store natural gas at sea, contributing to Mozambique's goal of becoming a major LNG exporter. Africa's role in the global LNG market is expanding attractively to Asian firms seeking energy investment opportunities. The agreement, signed with South Korea's Samsung Heavy Industries, will see the company deliver a state-of-the-art FLNG platform to tap into Mozambique's vast offshore gas reserves. According to South Korean news agency Yonhap, Samsung Heavy Industries signed an initial contract with a European shipping company operating in Africa to build the floating LNG facility. A company spokesperson noted that the final agreement will be signed at a later date. 'Countries have shown increased interest in energy security following the Russia-Ukraine war, and investments in offshore energy production facilities are expected to grow amid U.S. President Donald Trump's shifting energy policies, ' the company said. The project highlights Africa's expanding role in the global LNG market and reflects growing interest from Asian engineering and shipbuilding firms in the continent's energy sector. LNG investment surges in Mozambique The International Energy Agency estimates that Africa will require $200 billion (12.7 trillion meticals) annually by 2030 to achieve universal access to modern energy. Mozambique, with an estimated 100 trillion cubic feet of natural gas, is central to this goal and is seeking additional investment to develop its vast reserves. Samsung Heavy Industries has played a key role in Mozambique's rise as a global LNG player. Its first project, Coral Sul FLNG, developed with Eni and CNPC, was the world's first ultra-deepwater floating LNG plant and marked Mozambique's entry into LNG production in 2022. Building on that success, Samsung has now secured a $637 million contract to build a second FLNG facility for a European shipping company. The FLNG facility will allow for the production, liquefaction, and storage of natural gas directly at sea, eliminating the need for expensive onshore infrastructure. It supports Mozambique's broader goal of monetizing its estimated 100 trillion cubic feet of natural gas and establishing itself as a major exporter in the global LNG market. The project aligns with Mozambique's broader ambition to become a leading LNG exporter. Other energy giants, including TotalEnergies, have also expressed interest in restarting work on Mozambique's $20 billion LNG project, aiming to begin production by 2029. Industry analysts view the FLNG deal as a key step toward strengthening global energy security and diversifying gas supply routes amid continued volatility in traditional markets. Construction is expected to begin later this year, with delivery set for 2027. The Korean company said the contract reflects growing global confidence in its offshore engineering expertise. Samsung Heavy Industries has already secured $3.3 billion in orders this year—34% of its $9.8 billion target. Its order backlog stands at $26.5 billion, enough to sustain operations for the next three years.
Yahoo
07-07-2025
- Politics
- Yahoo
What is the Houthi-controlled 'Galaxy Leader' ship targeted by Israel?
The ship was taken to the coast of Yemen after it was hijacked, and the Houthis turned it into a showcase of their war against Israel and the West. The Israeli Air Force targeted the Galaxy Leader cargo ship as part of its strikes on Houthi-controlled targets across Yemen late on Sunday night. The ship was seized by the Houthis in November 2023, as the Yemeni group began its campaign targeting Red Sea vessels it claimed were linked to Israel, following Hamas's October 7 massacre and the subsequent war in Gaza. Following the capture of the vessel in 2023, Houthi military spokesman Yahya Saree said the group would target all ships owned or operated by Israeli companies or carrying the Israeli flag. The ship was taken to the coast of Yemen after it was hijacked, and the Houthis turned it into a showcase of their war against Israel and the West. However, the Bahamas-flagged cargo ship was not directly owned or operated by Israelis but leased from a British company partly owned by Israeli national Rami Unger to a Japanese company. Two ships owned by Unger were previously attacked by Iran in the Gulf of Oman in 2021. According to Lloyd's List, the ship was 'owned by UK-registered company Ray Car Carriers, which is in turn partly owned by two Israeli nationals, which was enough to make it a target.' The hull of the car carrier was worth $40 million, the report added. On the day of its capture, the ship left a port in Turkey and headed for India. Onboard were 25 crew members of different nationalities, including Ukrainians, Bulgarians, Filipinos, and Mexicans. No Israelis were onboard. The crew was not heard from for months after they had been kidnapped by the Houthis and were only released in January of this year, some 14 months later, when the terror group allowed the captive crew to leave for Oman. The Houthi-run Al-Masirah TV noted at the time that the release was carried out 'in support of the ceasefire agreement in Gaza,' which had entered into effect at the time and would last until mid-March. In a statement released as the IDF struck in Yemen, Defense Minister Israel Katz stated that the Houthis continued to use Galaxy Leader for terror purposes. The International Chamber of Shipping, which represents ship owners, has called the Houthi attacks "unacceptable acts of aggression which threaten the lives of innocent seafarers and the safety of merchant shipping." Seth J. Frantzman and Yuval Barnea contributed to this report.
CNBC
24-06-2025
- Business
- CNBC
Many insurance underwriters won't offer coverage to U.S., Israel, U.K.-linked vessels at any price
The conflict in the Middle East has led many insurance underwriters in the maritime shipping market to avoid offering coverage to any U.S., Israel, or U.K.-linked vessels. "Many underwriters are not touching vessels with perceived U.S., U.K. or Israeli links at any price," said David Osler, insurance editor for Lloyd's List. According to insurance broker Marsh McLennan, rates among insurance companies that are offering coverage to vessels are now ranging between 0.25%-0.45% of ship value, up from 0.125% a few weeks ago. These rates were consistent over the previous week, but after the U.S. strikes over the weekend on Iran nuclear sites, Middle East marine war risk rates "hardened significantly," according to Osler. By the end of the day on Monday, pricing had risen to as high as 0.5%, and was even higher for U.S.-affiliated ships. Osler tells CNBC because of the fluidity, underwriters also cut the required notification period from 48 hours to 24 hours. "The certainty we can convey is that we can get insurance. The uncertainty is the pricing," said Marcus Baker, global head of marine, cargo, and logistics at Marsh McLennan. Baker told CNBC he cannot remember a time when the notification period was reduced from 48 hours to 24 hours. Middle East ocean freight rates have also experienced a surge. Among issues that are influencing the insurance market are concerns about Iran blocking and trapping ships, and the level of appetite from China, a big customer of Iranian oil. President Trump said in a social media post on Tuesday that China can keep buying Iranian oil, a signal the U.S. was not intent on maximizing pressure on Iran's economy. "If there was a pullback from China, there would be less call for war risk, so the simple laws of supply and demand suggest it should calm rates," said Osler. Osler said rates should ease off if the current tentative ceasefire holds, based on information he has received from insurance market sources, but the headlines Tuesday indicating Iran and Israel were possibly not as close to de-escalation as the U.S. had hoped are now weighing on the outlook. "This just gets to the heart of the nervousness that we're seeing in the marketplace, because they just, don't know, and things are happening so fast. I mean, in Trump's interview this morning, I don't know what that's going to do, but he's obviously angry," Osler said of President Trump's comments to the press before he left for a NATO summit when he said he was "not happy" with Israel and Iran, after having announced the ceasefire on Monday night. "The developments effectively put the market in wait-and-see mode, with conditions volatile as underwriters come to terms with political developments as they unfold," Osler said. "Inquiries are said to be well down, which indicates that some owners are not prepared to take bookings to the region, given the military situation." Baker said a decision by Iran to shut down the Strait of Hormuz has political and economic aspects, and practical issues for China and India, the largest destinations of Iranian crude, not to mention the reaction from other Middle Eastern nations to consider, incuding Saudi Arabia, Qatar, and Oman. Last Wednesday, the Joint War Committee of Lloyd's of London's war risk underwriters met, where they released a list of designated areas underwriters have the discretion, but not the obligation, to levy additional premiums or APs. This list remains unchanged. In an updated threat circular from British maritime security firm Ambrey released on Tuesday, it wrote, "There is a realistic possibility that the conflict between Israel and Iran will continue/restart, and there may be subsequent U.S. involvement, but the risk of U.S. involvement is assessed to have lowered. However, the Gulf is generally taken to be part of the wider Indian Ocean listed area and links to the listed Red Sea. This means that in practice, shipowners must provide insurers with notification of transits." Baker said it is important to put the rise in rates in context of recent conflict zones and shipping. "Ukraine rates went up to 5% and we're only, we're not even a tenth of those rates yet," he said. "Five percent of around a million dollars, or a million and a half dollars, depending on the size of the ship. It was a very significant increase in the value of grain, which was way less than the value of a cargo of oil and a VLCC [very large crude carrier]. It's just a question of different underlies, different appetites, different risk perceptions, and that will influence where things go," Baker added.
Al-Ahram Weekly
19-06-2025
- Business
- Al-Ahram Weekly
Downbeat prospects for the Suez Canal - Economy - Al-Ahram Weekly
Losses in revenue from the Suez Canal are likely to grow this year with the escalating tensions in the region in the wake of the Israel-Iran war. In the year and a half after Israel's war on Gaza began in October 2023, the Suez Canal lost around $8 billion in revenues. Houthi group attacks in the Red Sea in solidarity with the Palestinians against the Israeli war on Gaza also caused major shipping lines to divert their route through the Suez Canal to the longer one around the Cape of Good Hope. Egypt has lost 'approximately $800 million in monthly revenues from the Suez Canal, with a total aggregate amount of $8 billion, since the beginning of Israel's war on Gaza,' wrote Foreign Minister Badr Abdelatty in an article in the British maritime publication Lloyd's List in May. The canal brought in an unprecedented $9.4 billion in revenues in fiscal year 2022-23. It is one of Egypt's main sources of foreign currency, and a decline in its revenues will put pressure on the country's foreign-exchange reserves, likely causing the dollar to strengthen against the Egyptian pound, Karim Adel, head of the Al-Adl Centre for Economic and Strategic Studies, told Al-Ahram Weekly. Mohamed Anis, an economic expert, told the Weekly that the Bab Al-Mandeb Strait which links the Red Sea to the Indian Ocean cannot support additional tensions that negatively affect the global shipping companies' passage through the strait. This Israel-Iran war adds to the pressure on Suez Canal revenues and therefore the Egyptian economy. The Bab Al-Mandeb is a vital trade route between the Mediterranean and Asia. Vessels carrying goods between Europe and Asia, as well as oil from the Middle East to Europe and North America, pass through it when navigating the Suez Canal. Anis added that lower maritime traffic through the canal is expected to have a significant impact on revenues, forecasting that they will shrink to $2.5 billion in 2025. In 2024, revenues stood at $3.9 billion, he said. Moreover, with the flare-up of further conflict in the region, reducing Suez Canal transit fees may no longer be effective in attracting shipping companies back to the route, as many have shifted to the Cape of Good Hope, he explained. In May, the Suez Canal Authority (SCA) announced a 90-day 15 per cent discount on transit fees for container ships with a net tonnage of 130,000 tons or more, whether loaded or empty. The discount was meant to encourage the shipping companies to gradually return to the Suez Canal following a brief ceasefire in Gaza and a truce between the US and the Houthis. Another worrying factor is the possibility of the closure of the Strait of Hormuz. This is the primary export route for Gulf oil, which accounts for about 20 per cent of global oil supplies. It is also critical for natural gas exports, with Qatar controlling a large portion of the Gulf's 30 per cent share, Anis said. He warned that any consequences of the Israel-Iran war affecting the Strait of Hormuz could severely disrupt the global oil trade, creating a sharp supply shortfall and driving up prices from the cost of crude itself to shipping and operational expenses. Oil prices could reach $120 per barrel should the US intervene militarily against Iran and the strait be completely closed, removing approximately four million barrels per day from the global market, Anis said. Trade volumes through the strait exceed $1 trillion annually, with over 2.5 billion tons of cargo passing through each year, Adel said. Raw materials such as grain, iron ore, and cement account for 22 per cent, while the container trade carrying finished goods to the Gulf countries makes up about 20 per cent. * A version of this article appears in print in the 19 June, 2025 edition of Al-Ahram Weekly Follow us on: Facebook Instagram Whatsapp Short link:
