Trump’s toughest sanctions yet on Russia may upend oil markets and test India’s ties with Moscow
Since taking office for the second time early this year, U.S. president Donald Trump has warned, pressured, and threatened India against buying Russian oil in an effort to push Vladimir Putin to negotiate an end to the war in Ukraine. Now, nearly 10 months in, he appears to have finally forced India’s hand with sanctions on two of Russia’s largest oil producers.
The latest American sanctions on Rosneft and Lukoil, which together account for over 5 per cent of the world’s oil output, have jolted the global oil market – and put Delhi in a difficult position.
Global oil prices rose by nearly 9 per cent on Thursday from their lowest of $60 at the start of the week, signalling widespread disruptions.
The sanctions, the first that Trump’s administration has imposed directly on Russia, mark the latest attempt to squeeze Moscow’s war chest and pile pressure on it to end the war.
Trump said he “just felt it was time” for action, calling it a very big day in Washington’s support for Ukraine, and confirmed the cancellation of a planned summit with Putin in Budapest due to what he described as a lack of progress in negotiations.
In addition to Russia, the sanctions are expected to affect China and India, the largest importers of Russian oil. The Asian economic giants have both come to rely heavily on cheap Russian crude since the war in Ukraine led Europe to phase out its dependency on Russian energy.
Analysts said the flow of Russian crude into India would take a hit and the import bill for its refiners would rise in the absence of the steep discounts previously offered by Russian exporters.
The magnitude of these sanctions appears “far-reaching” and could have a real impact compared to the price caps and other restrictions imposed by the G7 members in 2022, Sanjay Kumar Kar, a professor at Rajiv Gandhi Institute of Petroleum Technology, told The Independent.
However, the US would struggle to sustain these sanctions, as multiple superpowers are affected, he added.
Russia had earlier succeeded in circumventing the G7price caps, which imposed a financial penalty on Moscow, but allowed the Russian oil to remain in the market. Still, the measure dealt a financial blow to Moscow: reduced revenues for Russian oil companies translated into lower tax receipts for the government. The latest round of sanctions aims to amplify that impact.
“US sanctions adversely impact the oil trading nations, most importantly, it creates huge inconvenience for the leading oil importing nations, of course, it impacts the sanction-receiving country and its companies,” he explained.
“Recent sanctions on Rosneft and Lukoil are likely to cause global crude oil demand-supply imbalance and price fluctuations. Major buyers of Russian crude would recalibrate their crude oil import strategies, possibly realign their crude import basket,” Prof Kar added.
India has imported nearly 1.7 million barrels of Russian crude per day so far this year, while China has bought another 2.2 million barrels.
India now counts Russia, a key defence and trading partner since the Soviet era, as its biggest energy supplier, in a significant pivot away from the Middle East.
