A potential US move to impose 100% tariffs on countries purchasing Russian oil could escalate crude prices, impact India’s economy, and complicate diplomatic relations amid ongoing global energy tensions.
A fresh United States threat to impose 100% tariffs on countries that keep buying Russian oil could intensify pressure on India’s economy by pushing up crude prices, stoking inflation and widening the current account deficit, according to Sachin Gupta, chief ratings officer at CareEdge Ratings.
Gupta said the risk comes at a sensitive moment, with tensions over Iran and disruption in the Strait of Hormuz already clouding the outlook for global energy supplies. He argued that if India is forced to cut back sharply on Russian crude while the Hormuz route remains constrained, the effect on the market could be severe enough to drive oil beyond $100 a barrel. In a worst-case scenario, he said, prices could climb to $110-$120 a barrel.
That warning follows reports that a bipartisan group of United States senators has revived a Russia sanctions proposal that would target the five biggest buyers of Russian crude and gas, including India. Business Standard reported that the bill has been revised from an earlier version that had floated tariffs as high as 500%, with the new draft setting the maximum at 100% and narrowing the focus to the largest importers. Other reports said the move could complicate trade talks between Washington and New Delhi and add strain to ties already under pressure from the war in Ukraine.
Gupta said India’s recent reliance on discounted Russian crude leaves it exposed if alternative supplies become harder to secure. He said Russian oil accounted for around half of India’s crude imports in July, and warned that if India and China both stepped back from Russian purchases while Hormuz remained disrupted, nearly 30% of global oil supply could be affected. That, he said, would place strong upward pressure on prices and could force Indian fuel retailers and the government to absorb part of the shock before costs are eventually passed on to consumers.
He added that India could probably manage crude at about $100-$105 a barrel, but said pressure on oil marketing companies would rise sharply above $110. Even so, he said India has shown an ability to diversify supply when needed and would continue to prioritise energy security. The harder challenge, he said, is not finding replacement barrels but paying the price required to secure them.
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