Tight ropewalk for India as Trump threatens secondary tariffs on Russian crude

New Delhi, April 1 US President Donald Trump’s threat of secondary tariffs on countries buying Russian crude oil has infused “uncertainty” with Indian government officials pointing to a “tight ropewalk”.

Secondary tariffs on countries buying crude oil from Russia mainly impact China and India, which account for around 80 per cent of Russia’s crude exports.

Sources said the stand-off between India’s largest seaborne crude oil supplier and one of its largest export markets is a “tricky curveball”.

Around late afternoon, Brent prices rose by 0.09 per cent to $74.84 per barrel, while WTI was higher by 0.15 per cent at $71.59.

An official with a domestic refiner said, “There is too much activity (volatility). India has diversified its sources. Leaving aside Russia and Venezuela, there are 38 countries to procure crude. How the dynamics of securing spot supplies from Middle East or Africa or any other region will work out is a function of cargoes available and prices? Currently, prices are still below $75 a barrel, which is a breather, but how it reacts going ahead needs to be seen.

A top official said: “Currently, there is no clarity on the manner in which these (secondary) tariffs will be imposed and its time period. Hypothetically speaking, secondary tariffs will impact around 4.6-4.8 million barrels per day (mb/d) of supplies. If this happens then there will be a shortage in the short term till other suppliers move in to fill the gap. How this impacts the market, inflation, recession, etc is another game altogether. There are too many variables here to give you an outlook. It is a tight ropewalk”.

“As usual, it is wait and watch. Refiners are adjusting accordingly and will or are exploring spot trades as they seem fit. Russia accounts for no less than 36-37 per cent of our imports and that is a very big number.”

Russian supplies on an average account for 36-38 per cent of India’s crude oil imports, most of which is spot.

Traders said crude oil prices have inched up higher following Trump’s warning of potential measures to curb Russian crude exports. Additionally, a decline in global crude inventories stored on tankers further supported bullish sentiment, reinforcing the uptrend in oil prices. However, prices are range bound as there are fears that tariff wars may fuel recession.

An analyst with a global market intelligence firm said that there is not much clarity at present on how the tariff mechanism will look. However, Trump’s ultimatum is being viewed as a “threat”. More clarity should emerge after Thursday (April 2).

While discussing India’s crude oil imports for March 2025, Sumit Ritolia, Kpler’s Lead Research Analyst for Refining & Modeling, told businessline last week: “If secondary sanctions targeting buyers, traders, or insurers are not imposed, we can expect continued strong Russian crude flows to India, especially in a high-demand, high-margin environment.”