Russian oil imports: What are India’s options as US threatens further tariffs?

The US has threatened to impose an unspecified penalty in addition to 25% punitive tariffs on India for its imports of Russian oil. To avoid these sanctions without harming India’s economic interests, India has two broad options: restructuring supply chains or diversifying export markets.

Using the first option, India can reduce its dependence on Russian oil by reverting to traditional oil-importing routes, such as the Middle East, the US, Africa, and Latin America. Or, India can identify alternative markets beyond the European Union, such as the Asia-Pacific and African countries, for exporting refined oil products.

The sanctions by the EU on Russia introduced significant uncertainty and volatility in the global oil market. While European countries have established new supply relationships with Middle Eastern producers, Russian oil flows have shifted predominantly to Asia.

The top three destinations for Russian crude oil exports are: India (with a 28% share and 1.69 million barrels per day (mbd)), China (with an 18% share and 1.09 mbd) and Turkey (with a 7% share and 0.4 mbd). Countries like India, which have significantly increased their crude oil imports from Russia in recent times and enhanced export of refined petroleum products to Europe, may face challenges due to the sanctions.

The EU sanctions have significantly altered Russia’s energy trade...

Read more