In this report, it's clear that Russia is struggling to find buyers for its oil and is thus forced to reduce prices significantly.
President Donald Trump's decision to impose a 25% penalty tariff on India for purchasing Russian oil has sparked a significant shift in the global oil market. With the existing 25% tariff combined, this totals 50%1, a move aimed at deterring India from supporting Russia's economy through oil imports.
The Resilience of India's Oil Imports
Despite the tariffs, Indian public opinion has been resistant to what is perceived as U.S. interference in India's foreign policy3. Indian state-run refiners, such as the Indian Oil Corporation and Bharat Petroleum Corporation Limited, have resumed Russian oil purchases, albeit at discounted rates3. This move has increased Russian oil's share in India's imports to 35%3.
The Stability of Urals Oil Prices
The tariffs have not directly decreased India's imports from Russia, but they could influence global oil dynamics. As India continues to buy Russian oil at discounted rates, it may support the stability of Urals oil prices, benefiting Russia. However, the broader impact on global oil prices could be more complex, as the increased tension might lead to varied market responses3.
Russia's Diversification Strategies
In response to the rift between the U.S. and India, Russia is exploring other markets, with China being a significant potential buyer. Russia is promoting a "great Eurasian partnership" involving Moscow, Beijing, and Delhi, which could enhance oil sales to China3. Additionally, Russia is likely to focus on China and other Asian markets to absorb excess oil, leveraging economic ties and strategic partnerships. This diversification will help Russia maintain oil revenues despite geopolitical pressures from the West3.
The Implications for China
China's increased alignment with Russia could result in greater economic cooperation, including oil purchases. This could lead to strengthened energy ties between China and Russia, potentially altering the global energy landscape. The U.S. tariffs on India may inadvertently push India closer to China and Russia, further complicating U.S. strategic interests in the region3.
However, China is not interested in importing more Urals oil due to high logistics costs and the risk of new US sanctions. Urals is not a basic grade in the structure of Chinese imports due to the remoteness of Russian ports and high logistics costs3.
The Kremlin's Efforts to Sell Excess Oil
The Kremlin may have to offer further discounts to sell its excess oil3. Last year, India imported nearly 36% of its crude oil from Russia, a significant increase from the 2% before the Russian invasion of Ukraine4. As a result, a barrel of Urals oil is now $1.50 cheaper than a barrel of Brent due to reduced sales in India5.
Trump has declared the war in Ukraine an "unusual and extraordinary threat" to the national security and foreign policy of the United States6. The surcharge on Indian imports from 25 to 50 percent will be due at the end of August, as announced by US President Donald Trump7. Trump stated that India imports "directly or indirectly" oil from the Russian Federation, which poses a security risk to the United States7.
Trump originally threatened China, Brazil, and EU countries like Hungary or Austria with tariffs of "around 100 percent," but it is unclear if these threats have been carried out8. This article does not provide any new information about the price of oil or the Kremlin's efforts to sell excess Russian oil in other markets8. The source of the information is ntv.de, mpa/AFP8.
Trump has imposed so-called secondary sanctions on India, marking the first time he has done so against a country9. The goal of the US tariffs on India is to impact Russia's oil revenues and weaken its ability to fund the war against Ukraine9.
- The tariffs imposed by President Trump on India for purchasing Russian oil have combined to total 50%, a significant move in the employment policy sphere, as it aims to influence foreign and economic policies (business, politics, general-news, finance).
- The Indian Oil Corporation and Bharat Petroleum Corporation Limited, state-run refiners in India, have resumed purchasing Russian oil at discounted rates, reflecting the implementation of employment policies within the oil industry (employment policy). This decision has increased Russian oil's share in India's imports to 35%, indicating a strategic shift in business relations (business, general-news).
