US President Donald Trump said he is “pissed off” with Russian President Vladimir Putin. He threatened to impose “secondary tariffs” on Russian oil if a truce with Ukraine is not done.
In a telephone conversation with NBC, Trump said that if Moscow obstructs his attempts to resolve the conflict in Ukraine, he will slap secondary tariffs of 25 percent to 50 percent on all Russian oil within a month.
Since Russia is among the top three oil producers in the world, penalising Moscow’s supplies might significantly impact the oil market, leading to a surge in global inflationary pressures.
The latest news comes after the US imposed 25 per cent secondary tariffs on countries buying oil from sanctioned Venezuela. Separately, Trump also hinted at “Secondary tariffs” on Iranian oil that are not yet defined.
With the uncertainty around trade tariffs in the background, the latest threat to Russia adds a new layer of complexity to the global oil trade. The risk of higher crude prices is high, especially for major oil importers like India and China. For India, this comes at a crucial time.
Should the US press ahead, India, which has become a key buyer of discounted Russian barrels, would face extreme pressure. Separately, in January 2024, India accounted for nearly half of Venezuela’s crude exports, making it the largest buyer that month.
Secondary oil tariffs: Impact on India
India’s energy ties have been improving with those nations, with the country eyeing long-term oil contracts. However, new secondary sanctions could disrupt supplies, increase costs, and force refiners to rethink their sourcing strategy.
The “Secondary tariffs” are a new weapon in Trump’s arsenal. Direct sanctions prohibit US entities from trading with Venezuela. Secondary tariffs penalise other countries for doing business with sanctioned nations.
It’s an indirect way to tighten economic pressure globally, without completely cutting off trade. For global markets, this escalating tariff war means uncertainty. Businesses and governments are watching this development closely.
Trade barriers threaten to disrupt supply chains, raise costs, and impact economic growth. India depends on imports for over 85 per cent of its oil needs and has been looking to diversify its crude imports.
With Venezuela’s, Iran’s and Russia’s oil now under US scrutiny, Indian refiners need to rework sourcing strategies. This could push them to increase their dependence on West Asian suppliers.
The question is: Will India risk US trade tensions to secure discounted Russian, Iranian and Venezuelan crude, or will it shift focus to other suppliers?
