Latest news with #WesternSanctions
CNA
4 days ago
- Business
- CNA
CNA Explains: Why India buys Russian oil and will it yield to Trump's tariff pressure?
SINGAPORE: US President Donald Trump on Wednesday (Aug 6) announced an additional 25 per cent tariff on India over its purchase of Russian oil, bringing the combined levy to 50 per cent. This brought ties between India and the US to a new low. CNA looks at how India's Russian oil imports have grown in recent years, why this is an issue for Trump and the potential impact of the higher tariffs. Why does India import oil from Russia? As one of the world's largest oil consumers, India relies on foreign suppliers for more than 85 per cent of its oil needs. The country traditionally relied on the Middle East for its oil supply. However, the outbreak of the Ukraine war in 2022 and Western sanctions on Russia presented an opportunity for New Delhi to obtain discounted crude from Moscow. The cheaper oil has reduced costs for Indian refiners. In 2024, Russia accounted for nearly 36 per cent of India's total crude oil imports, up from roughly 2 per cent before the war, according to data released by the country's commerce ministry. The price advantage of Russian oil has narrowed over the years, dropping from around 14 per cent in the 2023 to 2024 financial year to about 7 per cent in 2024 to 2025. But it remains economically attractive for India. Why is the US concerned? The US has said that India's purchase of Russian crude is fuelling Moscow's war effort in Ukraine. Although Ukraine's Western allies have repeatedly sought to hobble Russia's export earnings, Moscow has been able to redirect energy sales from Europe to other countries, including India and China. Apart from geopolitical reasons, there are economic considerations. Trump's trade advisor Peter Navarro told reporters on Wednesday that India was the 'maharaja of tariffs'. New Delhi's high tariffs and non-tariff barriers meant the US sends 'a lot of dollars overseas to India to buy their products in an unfair trade environment', he said. 'India then uses American dollars to buy Russian oil.' How will Trump's latest tariffs affect India? Indian exporters warned that additional US tariffs risked making businesses "not viable", especially for small- to medium-sized enterprises where profit margins are already thin. "The 50 per cent reciprocal tariff effectively imposes a cost burden, placing our exporters at a 30 to 35 per cent competitive disadvantage compared to peers from countries with (a) lesser reciprocal tariff," said S C Ralhan, president of the Federation of Indian Export Organisations. He added that the tariffs were 'a severe setback' for India's exports. Manoranjan Sharma, the chief economist at Indian credit rating agency Infomerics Ratings, told Reuters that the tariffs would hit India's gross domestic product and affect employment to a certain extent. But while the tariffs were concerning, he said there was no reason for alarm as India is 'a largely domestically driven economy', with exports accounting for about 18 per cent of India's GDP. Sharing that view, Ranjeet Mehta, secretary-general of India's PHD Chamber of Commerce and Industry, said that the Indian economy is 'very resilient and very robust'. 'This is an opportunity to diversify to other markets of the world,' she told Reuters. 'I think that this is the time to really realign the supply chain and focus on economies other than the US for the time being. However, we request, we urge both the government of India and the government of the US to engage in a dialogue so that these disruptions can be sorted out." Can India diversify its oil sources? India's foreign ministry said on Monday that it began importing from Russia because traditional oil supplies were diverted to Europe after the outbreak of the Ukraine war. India still sources crude oil from parts of the Middle East, such as Iraq, Saudi Arabia and the United Arab Emirates. The region accounted for 45 per cent of the country's total imports in 2024. According to Minister of Petroleum and Natural Gas Hardeep Singh Puri, India has diversified its sources of supply to about 40 countries. More supply is coming onto the market from Guyana, Brazil and Canada, he added. So India could find other suppliers to meet its energy needs relatively easily. The question is cost - as none of India's other alternatives offer the same price advantage as Russia. What next for India? The Indian government on Wednesday called the additional tariffs 'unfortunate'. 'We reiterate that these actions are unfair, unjustified and unreasonable,' foreign ministry spokesman Randhir Jaiswal said in a statement, adding that India would take all actions necessary to protect its interests. Jaiswal said India has already made its stand clear that the country's imports were based on market factors and were part of an overall objective of ensuring energy security for its 1.4 billion people. One analyst said the new tariffs put Prime Minister Narendra Modi in a bind. "India is now in a trap - because of Trump's pressure, Modi will reduce India's oil purchases from Russia, but he cannot publicly admit to doing so for fear of looking like he's surrendering to Trump's blackmail," said Ashley Tellis at Washington's Carnegie Endowment for International Peace. Reuters previously reported that India's state refiners had paused Russian oil purchases. Can the US do the same to China? China is the biggest importer of Russian crude ahead of India. Türkiye is also a major buyer, and Trump has warned that countries purchasing Russian exports could face sanctions if Moscow fails to reach a peace deal with Ukraine. But Trump could find it difficult to impose such tariffs on Beijing, Dr Susan Stone told CNA. Dr Stone, Credit Union SA Chair of Economics at the University of South Australia, noted that US trade with China was five times larger than its trade with India. 'China's been showing its willingness to retaliate, and of course, it has the economic heft behind it to make those retaliatory measures more painful, maybe than other countries to the US,' she said. 'So it'll be interesting to see if the US threatens China, and then if it does, how that plays out.' As part of a negotiating period with Beijing, Trump has placed 30 per cent tariffs on goods from China, a rate that is lower than the combined import taxes that India faces. Ajay Srivastava, a former Indian trade official, told AP that Trump's decision on India was 'hypocritical' given that China buys more Russian oil. 'Washington avoids targeting Beijing because of China's leverage over critical minerals, which are vital for US defence and technology,' he said.
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.
South China Morning Post
26-06-2025
- Business
- South China Morning Post
Russian central bank to increase forex sales to US$113.53 million a day from July 1
The Russian central bank said on Thursday it will increase its foreign currency sales to 8.94 billion roubles (US$113.53 million) a day from July 1 for the rest of the year, compared with 8.86 billion roubles previously. Advertisement Under a complex scheme of foreign currency operations, the central bank buys and sells forex to ensure supply on the domestic market and also on behalf of the finance ministry, which runs the budget reserve National Wealth Fund (NWF). The netting of the central bank's own transactions and ones it conducts on behalf of the finance ministry provides a figure for overall forex interventions by the state, a major factor for the rouble market. The announcement implied that net sales of foreign currency by the state will rise to 7.45 billion roubles from 7.36 billion roubles from July 1 until July 4, when the finance ministry will announce new parameters for NWF transactions. The central bank cannot buy and sell dollars and euros because of Western sanctions imposed over Russia's actions in Ukraine Advertisement China's yuan, which is now the most traded foreign currency in Russia , has become the regulator's only instrument for forex interventions. The NWF is now held in yuan and gold.
Yahoo
20-06-2025
- Business
- Yahoo
Putin boasts about Russia's economy despite recession fears
President Vladimir Putin has hailed Russia's economic outlook, saying it has managed to curb inflation and ease its reliance on energy exports. His optimistic account in a speech at the St Petersburg International Economic Forum contrasted with sombre statements by some members of his government, who warned at the same conference that Russia could face a recession. Economic Minister Maxim Reshetnikov had said that the country is 'on the brink of going into a recession'. Mr Putin mentioned the recession warnings, but emphasised that 'it mustn't be allowed'. He pointed out that manufacturing industries have posted steady growth, allowing the country to reduce its reliance on oil and gas exports. 'The perception of Russian economy as based on raw materials and dependent on hydrocarbons exports have clearly become outdated,' Mr Putin said, adding that the economy grew by 1.5% in the first four months of 2025 and inflation has dropped from double digits to 9.6%. Mr Putin has used the annual forum to highlight Russia's economic prowess and encourage foreign investment, but Western executives have shunned it after Moscow sent troops into Ukraine in 2022, leaving it to business leaders from Asia, Africa and Latin America. The economy, hit with a slew of Western sanctions, has so far outperformed predictions. High defence spending has propelled growth and kept unemployment low despite fuelling inflation. Large recruiting bonuses for military enlistees and death benefits for those killed in Ukraine also have put more income into the country's poorer regions. But over the long term, inflation and a lack of foreign investments pose threats to the economy. Economists have warned of mounting pressure on the economy and the likelihood it would stagnate due to lack of investment in sectors other than the military. Mr Putin said the growth of military industries helped develop new technologies that have become available to the civilian sector. He vowed to continue military modernisation, relying on lessons learned during the fighting in Ukraine. 'We will raise the capability of the Russian armed forces, modernize military infrastructure and equip the troops with cutting-edge equipment,' Mr Putin said.
Associated Press
20-06-2025
- Business
- Associated Press
Putin boasts about Russia's economy despite recession fears
ST. PETERSBURG, Russia (AP) — President Vladimir Putin on Friday hailed Russia's economic outlook, saying it has managed to curb inflation and ease its reliance on energy exports. His optimistic account in a speech at the St. Petersburg International Economic Forum contrasted with somber statements by some members of his government who warned at the same conference that Russia could face a recession. Economic Minister Maxim Reshetnikov had said Thursday that the country is 'on the brink of going into a recession.' Putin mentioned the recession warnings, but emphasized that 'it mustn't be allowed.' He pointed out that manufacturing industries have posted steady growth, allowing the country to reduce its reliance on oil and gas exports. 'The perception of Russian economy as based on raw materials and dependent on hydrocarbons exports have clearly become outdated,' Putin said, adding that the economy grew by 1.5% in the first four months of 2025 and inflation has dropped from double digits to 9.6%. Putin has used the annual forum to highlight Russia's economic prowess and encourage foreign investment, but Western executives have shunned it after Moscow sent troops into Ukraine in 2022, leaving it to business leaders from Asia, Africa and Latin America. The economy, hit with a slew of Western sanctions, has so far outperformed predictions. High defense spending has propelled growth and kept unemployment low despite fueling inflation. Large recruiting bonuses for military enlistees and death benefits for those killed in Ukraine also have put more income into the country's poorer regions. But over the long term, inflation and a lack of foreign investments pose threats to the economy. Economists have warned of mounting pressure on the economy and the likelihood it would stagnate due to lack of investment in sectors other than the military.
