INDIA COULD appeal to extra 25 per cent to 50 per cent US tariffs over the acquisition of Russian oil, with US President Donald Trump indicating Sunday he was upset on the progress of peace talks with Russian President Vladimir Putin and warning of imposition of secondary tariffs on patrons of Russian oil if he felt Moscow was blocking his efforts to finish the battle in Ukraine.
India may additionally not obtain a concession on the sweeping US reciprocal tariffs set to be imposed on April 2, as Trump instructed reporters aboard Air Drive One which “all international locations” would face the brand new tariffs. This comes even because the US and India concluded their four-day talks on Saturday to find out the contours of a commerce settlement.
Russia has been India’s prime oil import supply throughout April-December 2024, in keeping with information launched by the Ministry of Commerce and Business.
Sources in India’s refining sector indicated that extra readability was wanted on what precisely the US would do and whether or not there can be any scope for exemptions if Trump had been to observe by way of on his menace of extra tariffs. “It’s troublesome to say how this may pan out. We want extra readability on what he (Trump) meant when he spoke about potential tariffs on patrons of Russian crude. Will or not it’s restricted to tariffs, or would it not contain doable secondary sanctions on patrons? That can also be a important query,” stated an trade supply.
India’s Russian oil imports have averaged 1.85 million barrels per day (bpd) within the first 21 days of March, sharply greater than February’s 1.47 million bpd and January’s 1.64 million bpd, in keeping with provisional information from commodity market analytics agency Kpler.
World costs could rise
IF RUSSIAN OIL had been to be priced out from the market, it might result in greater international oil costs. Whereas securing ample oil provides over the medium time period shouldn’t be a difficulty for India, greater oil costs and the lack of discounted Russian barrels, can be a setback for the nation.
To date, the Indian authorities and refiners have been clear they won’t purchase any oil that’s underneath sanctions or entails sanctioned third events. India has not bought crude from Iran for years as a result of US sanctions. Even Venezuelan crude that was coming to India was by way of sanction exemptions granted by the US to sure oil corporations.
‘India could should halt Russian oil purchases’
Business watchers and analysts, at the least in the intervening time, aren’t bracing for the total affect of Trump’s tariff threats. The US President has been mercurial in his tariff threats since taking workplace in January, however regardless of his threats to Russia — the world’s second-largest oil exporter — international oil costs haven’t seen a pointy rise.
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Nevertheless, if the White Home proceeds with imposing tariffs on patrons of Russian oil or enforces secondary sanctions, Indian refiners are more likely to halt their purchases of Russian crude, which at present holds the most important share in India’s oil import basket at over 30 per cent.
In such an occasion, they might most certainly flip to their conventional suppliers in West Asia, similar to Iraq, Saudi Arabia, and the United Arab Emirates (UAE). Whereas Indian refiners could also be pressured to scramble for different suppliers within the quick time period, oil provides over the medium time period are anticipated to stabilise.
Oil tops the record of India’s merchandise imports by worth, and oil costs affect numerous facets of the nation’s economic system. “This can be very unlikely that Indian refiners will stick with Russian crude imports if the US imposes tariffs. A fast shift to suppliers like Saudi Arabia and Iraq is more likely to change the misplaced Russian oil volumes,” stated an oil sector analyst.
US open to a deal on reciprocal tariffs
Trump stated that the US is open to negotiations on reciprocal tariffs however that “these pacts” must be mentioned after the reciprocal tariffs go reside on April 2. The Indian Specific reported final week that US negotiators didn’t reveal any particulars of the reciprocal tariffs to the Indian facet throughout commerce talks.
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Trump’s clarification that every one international locations will face reciprocal tariffs follows remarks from White Home financial adviser Kevin Hassett, who instructed Fox Enterprise that the measures can be closely centered on 10 to fifteen international locations that account for the majority of the US commerce deficit.
“There are greater than 100 international locations that don’t actually have any tariffs on us and don’t have any non-tariff obstacles,” Hassett stated, in keeping with Reuters.
Regardless of hopes inside Indian trade for a decision on reciprocal tariffs, Indian and US negotiators have but to agree on the phrases of reference (ToR) outlining the scope of the deal. Whereas talks stay of their early phases, the delay in finalising the ToR signifies that each international locations aren’t but on the identical web page to start formal negotiations on a bilateral commerce settlement (BTA), consultants stated.
The Indian Specific had additionally reported that Indian negotiators are involved the US might use reciprocal tariffs as leverage to push for an early deal on items, notably relating to market entry for American merchandise in India, similar to cars, whisky, and agricultural merchandise.
