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Informist, Tuesday, Apr. 1, 2025

MUMBAI – US President Donald Trump's latest threat to impose secondary tariffs on the purchase of Russian oil could affect China and India, Carsten Fritsch, commodity analyst at Commerzbank Research, said in a report Tuesday. The two countries increased their purchases of Russian oil following the loss of Western markets as a result of Russia's invasion of Ukraine, he said.

Russia was the most important oil supplier for both the countries in 2024. China imported 2.4 million barrels per day of oil from Russia last year, while India imported 1.9 million barrels per day. Russian oil exports totalled 7.5 million barrels per day in 2024, the analyst said citing data from the International Energy Agency.

On Sunday, Trump told NBC News that he was very angry with Russian President Vladimir Putin and would impose secondary tariffs of 25% to 50% on Russian oil buyers if Moscow tried to block efforts to end the war in Ukraine, Reuters reported. Trump also threatened Iran with similar tariffs and bombings if Tehran did not reach an agreement with the White House over its nuclear programme, according to the report.

In January, the administration of former US President Joe Biden had extended sanctions against vessels of the Russian shadow fleet as well as companies in the Russian energy sector. "As a result, buyers in India announced that they would reduce their purchases of Russian oil, which is also reflected in the drop in Russia's oil exports to India in January," Fritsch said.

Russian seaborne oil exports averaged 3.45 million barrels per day in the past four reporting weeks, Fritsch said, citing data from Bloomberg. Of this, 1.15 million barrels per day went to China and 1.37 million barrels per day to India. "Both countries have reduced their oil imports by sea from Russia slightly compared to the end of 2024, which suggests a dampening effect of the sanctions," Fritsch added.

"If Trump's threats actually materialise and Russian oil subsequently finds no or hardly any buyers, this would lead to a noticeable tightening of the oil market in view of the volumes in question. As a result, a considerable price increase would be expected, which would run counter to Trump's objective of low oil prices," Fritsch said.

Secondary tariffs against Iran also have the potential to significantly restrict oil supplies. Fritsch said that the likelihood of secondary tariffs against Iran is higher than in the case of Russia, as Trump seems much more determined about Iran. Iranian oil exports averaged 1.68 million barrels per day in the 12 months up to, and including, February. China would be the most affected, as it imported around 620,000 barrels per day of Iranian oil during this period, Fritsch said.  End

US$1 = INR 85.47

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Reported by Ashutosh Pati

Edited by Deepshikha Bhardwaj

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