Anindya Banerjee of Kotak Securities suggests India can withstand US threats of tariffs on Russian crude, as broader oil price shocks pose a greater risk to its economy.
India’s economy is likely to remain largely shielded if Washington follows through on threats to penalise buyers of Russian crude, according to Anindya Banerjee of Kotak Securities. Speaking to ANI in Mumbai on August 8, Banerjee said the main risk to India lies not in a forced switch away from Russian barrels but in a broader spike in global oil prices, which would hit inflation, the current account deficit and the rupee more sharply than any loss of discounted Russian supplies.
His comments come after the US Senate backed a bipartisan bill on Friday that could impose tariffs of up to 100% on countries buying Russian oil and natural gas, with India among the nations in scope. Business Standard reported that the revised proposal narrows the maximum tariff from an earlier 500% idea and gives the US president discretion to waive sanctions if doing so serves the national interest. The legislation is part of a wider effort to squeeze Moscow’s energy income as the war in Ukraine drags on.
Banerjee argued that the economics of Russian crude have changed significantly since 2022, when discounts were far more generous. He said the present advantage is only about $2 billion to $3 billion a year, small beside India’s annual oil import bill of roughly $150 billion. By contrast, other reports have shown that a $10 rise in average crude prices can add about $14 billion to $16 billion to India’s import costs, underscoring why market-wide price shocks matter more than the source of supply.
The strategist also said India has spent years reducing its exposure to dollar-based settlement risk and building alternative payment channels, including rupee trade through vostro accounts and arrangements using the UAE dirham. He pointed to India’s diversified crude sourcing from more than 40 countries, along with strategic and commercial stockpiles that he said give the country close to three months of cover. On that basis, Banerjee said supply disruption is unlikely to be the immediate issue, even as trade talks with the US continue and policymakers on both sides weigh a compromise.
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