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The National
11-08-2025
- Business
- The National
Why US tariff sledgehammer approach with India can prove counterproductive
What are, in theory, some key US strategic objectives? To diminish Russian energy earnings, bolster an anti-Russian coalition, build up India as a counterweight to China, open the Indian market to American exports, keep oil prices moderate, and promote global economic growth. Its latest oil sanctions policy pursues the first goal at the cost of all the others. US President Donald Trump's latest executive order adds a 25 per cent tariff on India's goods, because of its purchase of Russian oil, on top of the general 25 per cent levy. 'I don't care what India does with Russia. They can take their dead economies down together, for all I care,' he posted. The sanctions threat has already had an effect. Russia's Urals crude blend had been sold in India almost at parity to the international benchmark, Brent, a two weeks ago; now it is discounted by more than $5 per barrel. Indian refineries have stopped spot buys of Russian crude and secured at least 22 million barrels of non-Russian oil for September and October. If India cuts back on Russian oil, perhaps as part of a compromise deal, China will pick up some of the slack. But for logistical reasons, it is unlikely that it can take all the spare Russian crude. That will cut Russian energy earnings. Mr Trump announced on Friday he would meet Russian President Vladimir Putin in the former Russian territory of Alaska. On its own, further sanctions pressure will not force Mr Putin into serious negotiations. But it will add to other strains on the Russian economy, and perhaps slow its war machine. Europe, finally, is taking measures against other Russian exports, particularly in phasing out imports of its adversary's gas. So far, so good. What about the other effects of this policy? India has not taken the news well, to say the least. Its position on Russia's war against Ukraine has been morally questionable, its refiners have jumped on the chance to profit from discounted crude, and it is not smart to condone invasion when China has occupied Indian-claimed land since 1962. India's purchases of Russian oil rose from 0.2 per cent of its needs before the invasion of Ukraine, to 36 per cent now, selling some of the products back to Europe. New EU measures will indeed clamp down on that loophole. But New Delhi rightly points out that the whole structure of US and European sanctions was designed to allow it, and China, to continue buying Russian oil to avoid escalating oil prices. By restricting Russian sales, it was hoped its customers could extract discounts – as they have, although these have diminished over time. And sales using western shipping or services were supposed to abide by a price cap. This has proved hard to enforce, but that is not India's responsibility. India is far from the only country buying Russian oil. While India imports about 1.8 million barrels from Russia, last month, China bought about 1 million barrels per day by sea and a similar amount by overland pipeline, and Turkey took about 300,000 bpd. Even in Europe, Hungary and Slovakia have exemptions to continue buying some Russian crude. In June, Japan imported its first Russian oil for three years. Indian Prime Minister Narendra Modi promptly invited Mr Putin to visit India for an annual summit later in the year. India signed agreements to co-operate with Russia on aerospace as well as in various strategic minerals, while suspending purchases of American weapons. And Mr Modi plans to visit China for the first time in seven years later this month. Beijing will not bow to similar threats. If necessary, it will endure even higher US tariffs. It cannot afford to seem weak; making Chinese goods unaffordable will push up prices and empty shelves in the US, piling political pressure on Mr Trump. It has cut exports of critical minerals to stress US technology and defence corporations. The Middle Kingdom now buys almost no American oil, gas or coal. It will no doubt snap up additional Russian barrels at a discount. India's domestic market is indeed the most protected among major economies, or was, before the US began walling itself off. But Mr Trump's tariffs are imposed, varied, exempted and withdrawn so frequently and for so many ostensible reasons – safeguarding national security, boosting domestic manufacturing, raising revenue, forcing others to open their markets, stopping drug smuggling – that they cease to be useful as a negotiating tool. Cutting Russian oil exports will raise world oil prices. Mr Trump has shown himself very sensitive to domestic pump prices and inflation. His trade adviser and tariff fan Peter Navarro has said the President favours oil prices of about $50 per barrel. Yet this part of the tariffs and sanctions threats actually may not work out too badly. If China holds firm, then the maximum loss to the market from the 'secondary tariffs' will be the 2.1 million bpd of recent Indian and Turkish imports, and probably less. That would boost oil prices to the mid-80s per barrel. The oil market is expected to soften in the final part of the year – partly because of economic uncertainty caused by the US trade offensive. Opec+ has made large increases in allowable production. The group, of course, includes Russia, but it still holds dry powder. Having now in principle eliminated the 2.2 million bpd of 'voluntary' cuts by a subgroup of eight countries, it has a further voluntary tranche of 1.65 million barrels per day, then 2 million bpd of cuts committed by all Opec+ members, which is due to expire at the end of next year. Not all of these are real barrels. Members will increasingly find that they cannot raise production to target levels, particularly at short notice. But Saudi Arabia, the UAE and Iraq still have significant room to expand, and Kazakhstan continues overproducing substantially. They will be glad to fill a market gap in India, from which Russian oil had squeezed them out. That assumes that Russia does not retaliate by blocking Kazakh exports too, which go through its territory, or that US sanctions do not inadvertently catch Kazakh barrels. Somewhat higher prices would also encourage growth in US output, compensation for the Texan drillers who have been disgruntled by their president's pursuit of cheaper oil even as they cheer his pro-fossil fuel agenda. A more skilful policy would agree with India that it would steadily reduce purchases of Russian oil, issuing waivers to Indian refiners who comply, and sanctioning those who do not. That is what was previously done with Iranian oil exports. But otherwise, insulting India, and using the tariff sledgehammer instead of the sanctions scalpel, will prove counterproductive. The US is pushing the dominant power in South Asia, a natural ally, into the arms of its two Eurasian rivals. It will advantage the Chinese economy while it makes Beijing seem the more reasonable international partner. Or, Mr Trump may back down in Alaska and hand Mr Putin another economic and diplomatic win.
Yahoo
14-07-2025
- Business
- Yahoo
Russia's Cheap Oil Ride to India Hits a Fragile Plateau
Freight rates for Russian Urals crude from Baltic ports to India have dipped again in July, falling to $5.0–$5.3 million per Aframax shipment—down from $5.5–$5.7 million in June—as more tankers become available. But traders warn: don't get too comfortable. A new round of EU sanctions and a pending statement from Donald Trump could send rates—and risks—right back up. The drop in shipping costs reflects a brief window of flexibility. With Urals crude still priced under the $60 per barrel price cap, Western tankers and insurers are once again in play, keeping costs lower and logistics smoother. It's a familiar pattern: every time Urals dips under the cap, freight rates ease. Back in April, they fell to $6 million per voyage on average. Few expect the trend to last. The EU is finalizing its 18th sanctions package, which may lower the cap to $45. If that happens, or if Trump signals a tougher U.S. line on Moscow, Western tanker availability could diminish again, driving rates up and tightening access. Meanwhile, India—the top buyer of Russian seaborne crude—is already feeling the squeeze. The once-generous Urals discount has shrunk to just $1.70–$2 per barrel below Brent, the narrowest since the war began. Combined with refinery maintenance in Russia and locked-in term deals like Rosneft's with Reliance, Indian refiners are struggling to secure August cargoes. Some are eyeing alternatives like UAE Murban or U.S. WTI. Freight costs are still well above the pre-sanctions norm of $4.7–$4.9 million, a reminder that even when Russia complies with the cap, the discount pipeline isn't what it used to be. With policy pressure building and markets frozen in anticipation, this moment of relative calm could be the last breath before freight volatility returns with a vengeance. By Julianne Geiger for More Top Reads From this article on
Zawya
04-07-2025
- Business
- Zawya
Discount on Russian Urals oil shipped to India is smallest since 2022, traders say
Discounts for Russia's flagship Urals crude oil for delivery to Indian ports in August shrank to their narrowest levels since 2022 amid high demand and shrinking spot supply, three traders in the grade's market said on Friday. Narrowing discounts and lower supply of spot Russian barrels will push Indian refiners to look for alternative oil like United Arab Emirates' Murban or U.S. West Texas Intermediate (WTI) grades, traders said. The narrowing discount shows how Moscow is managing to keep its oil sales up despite Western sanctions, while its discounted oil is getting more expensive than before, though still cheaper than alternatives. Spot discounts for Urals crude narrowed to $1.70-2 per barrel to dated Brent on delivery ex-ship (DES) basis on average for cargoes arriving in India in August, from $2 to $2.50 per barrel to dated Brent on DES basis in July, the traders said. That is the narrowest discount for Urals oil cargoes to dated Brent in Indian ports since the Ukraine war broke out in 2022. Meanwhile, as the Russian oil grade is traded against Brent benchmark, its outright price has been mostly below the West's $60 per barrel price cap since April this year, allowing Western companies to provide shipping and insurance service for the barrels. Urals oil prices are supported by high demand in India and Turkey, the two largest buyers of the grade, traders said. Turkey's imports of Russia's Urals crude rose in June to their highest level since May 2024 on healthy refinery margins and seasonal demand for motor fuels, LSEG data showed. Meanwhile, Urals oil loadings are set to decline in July from June amid higher refinery runs in Russia. Russian oil supply is also set to decline in August amid a planned shutdown for maintenance of output on the Sakhalin-1 project that exports Sokol oil. India has been the largest buyer of Russian seaborne crude after Moscow diverted its energy supply away from the European Union, which imposed a ban late in 2022. Several Indian refiners that normally buy Russian oil on the spot market are not getting enough Urals oil for delivery in August, the sources said. India is exploring building three new strategic oil reserves to boost its emergency stockpile and strengthen energy security. Large volumes of Russian Urals oil are shipped to India under the deal between the country's largest private refiner, Reliance Industries, and Russian oil giant Rosneft last year, limiting the crude offered in the spot market, traders said.
Russia Today
26-06-2025
- Business
- Russia Today
Indian refineries ramp up Russian crude purchases
India has purchased 80% of Russia's seaborne Urals crude exports this year, with two private refineries increasingly buying more of this variety, Bloomberg reported, citing data analytics provider Kpler. Indian conglomerate Reliance Industries and Nayara Energy have bought 45% of the Urals crude imported into the country. The South Asian nation has bought 231 million barrels of Urals crude this year, according to the report. Both Reliance and Nayara's Russian oil purchases witnessed a significant jump in 2025, Bloomberg added. Reliance Group has become the world's largest buyer of Russian oil this year, buying 77 million barrels of Urals crude in 2025, according to the report. The group, which is owned by Indian billionaire Mukesh Ambani, signed a ten-year deal with Rosneft in December 2024 for 500,000 barrels of crude per day (bpd), worth around $13 billion annually, marking the largest energy deal between Moscow and New Delhi. Nayara has part-Russian ownership. In 2017, Rosneft Group led a consortium to buy a 98% stake in Essar Oil for $12.9 billion. The company was later restructured as Nayara Energy, with Rosneft keeping a 49.13% stake. Around 72% of its oil imports consisted of Russian crude, a significant increase from 27% just three years ago, Bloomberg said. Russia has been India's largest oil supplier since the escalation of the Ukraine conflict in 2022. In May, India's imports of Russian crude oil reached around 1.8 million bpd, the highest level in ten months, Reuters reported, citing Kpler data. The surge in imports in May has helped Moscow solidify its position as a major oil supplier to the world's most populous country. Industry watchers attribute India's frenetic buying of Russian crude to the volatile situation in the Middle East. Tehran, which controls the Strait of Hormuz, a major oil shipping route which accounts for 20% of the global oil supply, threatened to close the waterway in the wake of the US attacks on three of its nuclear installations on Sunday. New Delhi has said it would be able to offset the effects of the Strait of Hormuz being closed off.
Bloomberg
19-06-2025
- Business
- Bloomberg
Russia Oil Revenue Dented by Strong Ruble as Global Prices Jump
Russia is barely benefiting from the recent surge in oil prices because of its strengthening currency, keeping the Kremlin's revenue under pressure. As hostilities between Iran and Israel lifted global oil prices, Russia's Urals crude rose to more than $60 a barrel on June 13, according to data from Argus Media Ltd. That meant it had recovered all but 10% of its losses since the start of the year.
