US President Trump has threatened secondary tariffs on Russian oil unless an agreement on Ukraine is reached, posing a risk of inflation for developing nations like India, which sources 30% of its crude from Russia. The country is actively seeking to diversify its oil supply and mitigate potential economic impacts from these tariffs.

US President Donald Trump has signaled potential complications for Russian oil trade unless an agreement on the Ukraine conflict is reached soon. He threatened secondary tariffs of 25-50 percent on Russian oil buyers, citing that Russia is obstructing efforts to end the war in Ukraine. He stated, “If Russia and I are unable to make a deal on stopping the bloodshed in Ukraine, … I am going to put secondary tariffs on oil, on all oil coming out of Russia.”

The prospect of new US sanctions on Russian energy companies heightens the risk of inflation in developing economies, particularly for India, which relies heavily on Russian crude oil. As of March 2025, India imported over 5 million barrels per day (bpd) of crude oil, with approximately 30 percent sourced from Russia. The breakdown of imports reveals Russia was responsible for 1,864 thousand bpd, Iraq 920 thousand bpd, and other countries such as Saudi Arabia, the UAE, and the United States contributing smaller amounts.

India has increased its dependence on Russian oil due to the conflict, as it finds cheaper supplies favorable. In March, Indian imports of Russian crude reached an eight-month high of roughly 1.9 million bpd, a significant rise from the previous months despite ongoing sanctions against Russian oil entities.

Trump’s statements impacted oil prices, with a notable rise in benchmark futures. West Texas Intermediate increased by 3.1 percent, representing the largest gain in nearly 11 weeks. Despite a slight decline, Brent futures maintained stability around $74.49 a barrel while WTI rose modestly.

Should the United States enforce these secondary tariffs, India’s oil supply chain may be jeopardized. A Bloomberg report emphasized that American tariffs could force India to seek alternate suppliers. Warren Patterson, head of commodities strategy for ING Groep NV, mentioned, “Traditional sanctions have created enough uncertainty,” indicating that secondary tariffs would only exacerbate this uncertainty and affect the decision-making of potential buyers.

Indian refiners have responded proactively, seeking additional crude supplies from the Middle East, North Sea, and Mediterranean regions for imminent deliveries. The urgency reflects apprehension regarding the ability to source barrels originally procured from Russia. As part of a broader strategy, Indian refiners are working with various supply chain intermediaries to adapt following sanctions by the Biden administration.

To mitigate the potential impact, India is diversifying its crude oil sources. This includes increased imports from Angola, Brazil, and West Africa. Notably, Indian imports of US crude also rose significantly in March, highlighting India’s effort to reduce its dependency on Russian oil. Experts suggest this diversification strategy may cushion the country against adverse consequences.

In summary, President Trump’s threat of secondary tariffs on Russian oil poses significant concerns for India’s energy supply strategy. As India’s reliance on Russian crude has increased, the looming prospect of tariffs may compel the nation to seek alternate oil supplies. Nevertheless, India’s ongoing efforts to diversify its energy sources and adapt to changing circumstances reflect strategic foresight aimed at navigating potential supply disruptions in the ever-evolving geopolitical landscape.

Original Source: www.ndtv.com

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