US Threatens Higher Tariffs on India Over Russian Oil Purchases
The ongoing tension between the US and India has escalated due to India’s rising imports of Russian oil, a trend that began after the Russia-Ukraine conflict started in early 2022. The Trump administration has been vocal in its criticism, suggesting that India is indirectly supporting the Russian military efforts through its oil purchases.
Recently, President Trump announced a hefty 25% additional tariff on Indian imports of Russian crude oil, effective August 27. This move has sparked significant backlash from Indian officials, who argue that their oil trade is essential for securing energy for its vast population.
US Treasury Secretary Scott Bessent expressed concerns about the issue, labeling India’s approach as “arbitrage.” He implied that India is profiting from buying discounted Russian oil and then reselling it at higher prices. According to Bessent, Indian companies have earned around $16 billion in profits from these transactions.
Growing Trade in Russian Oil
India’s crude oil imports from Russia have surged remarkably since the start of the Ukraine war. Before the conflict, purchases of Russian oil were minimal. Analysts, including Matt Smith from Kpler, noted that India has been capitalizing on lower prices due to international sanctions on Russia, refining the oil, and exporting the finished products, even to European markets that have imposed bans on Russian oil.
Trump’s proposed sanctions aim to pressure Russia into finding a diplomatic solution to the ongoing conflict. Interestingly, the US has not extended similar scrutiny to China’s oil purchases from Russia, as China’s involvement existed prior to the conflict.
Bob McNally, head of Rapidan Energy and a former advisor to President George W. Bush, explained that the US government had encouraged India to buy Russian oil to stabilize the market and prevent gas prices from soaring in the US.
In August, India’s imports of Russian oil reached 2 million barrels per day, marking a significant increase. During this period, Russian oil accounted for about 38% of India’s total crude imports.
India’s Response
India has firmly rejected the US’s additional tariffs, stating that its oil purchases are driven by market needs and aimed at securing energy for its 1.4 billion citizens. The Indian Ministry of External Affairs released a statement highlighting the importance of these imports and labeling the US tariffs as “unfair and unreasonable.” The statement further expressed that India would take necessary actions to protect its national interests amidst these external pressures.
