New Delhi has reached out to prominent US lawmakers regarding a congressional proposal to impose punitive tariffs on countries purchasing Russian oil, a move that could have significant implications for India’s large-scale imports.
In June, India imported 2 million barrels of Russian oil per day, which accounted for 44% of its total crude oil imports, as per Indian officials and ship-tracking data.
Industry executives believe that the proposed sanctions may serve as a tactic to compel Russian President Vladimir Putin to engage in negotiations over the ongoing conflict in Ukraine.
Nevertheless, they warn that removing around 4 million barrels per day of Russian oil from the global market could lead to soaring oil prices and higher inflation, thereby contradicting President Donald Trump’s electoral commitments.
If enacted, the bill’s provisions would introduce “secondary sanctions,” including a staggering 500% tariff on countries obtaining Russian energy, with India, along with China and Turkey, being primary targets.
For the fiscal year 2024/25, India’s expenditure on Russian crude is projected to be around $50 billion, according to customs data.
Senator Lindsey Graham, a Republican from South Carolina and ally of President Trump, has partnered with Democratic Senator Richard Blumenthal to sponsor the bill.
Graham stated on his website, “We have been working with the White House since day one in drafting this package. We now have over 84 Senate co-sponsors and 70 House co-sponsors of legislation to enact hard-hitting sanctions on Russia and its financial backers.
“If a country buys cheap Russian oil and gas and other products and doesn’t help Ukraine, they are screwed. That is the price for propping up Putin’s war machine.”
Graham also mentioned that President Trump has agreed to support the bill.
In discussions with CNN, Blumenthal indicated that the bill was developed in extensive consultation with Germany, France, and the UK, which had recently recommended lowering the price cap on Russian oil sales from $60 per barrel to $45.
However, the US did not accept this proposed price cap adjustment.
Indian Foreign Minister Subrahmanyam Jaishankar addressed these concerns, stating, “Any development which is happening in the US Congress is of interest to us if it impacts our interest.”
He noted that Indian officials have been in communication with Graham and asserted, “We’ll then have to cross that bridge when we come to it, if we come to it.”
A senior official from the Indian government clarified that while India adheres to sanctions approved by the United Nations, it does not recognize those imposed by Washington, the UK, or the EU.
Estimations suggest that India may save between $3 billion and $4 billion in the fiscal year 2024/25 by purchasing Russian oil as opposed to sourcing an equivalent quantity from Saudi Arabia.
Recent data reveals a 12% month-on-month increase in Russian oil shipments to India, reaching 2.07 million barrels per day in June, with volumes comparable on a year-over-year basis.
Currently, Russian oil is being secured at a discount of $2.00-$2.50 per barrel compared to the European Brent benchmark, significantly cheaper than last year’s rates.
In April, Russian oil, priced at $75 per barrel, was found to be more economical than Iraqi crude and about $7-$8 less than both Saudi and US oil on a delivered basis, according to customs data calculations.
image source from：energyintel
