India to Cut Russian Oil Purchases by 22% Amid U.S. Tariff Hike

As the U.S. tariff exemption on Indian goods nears its expiration, India is planning to reduce its purchases of Russian oil. This decision comes as a response to U.S. pressure, which has been urging India to halt its oil imports from Russia. The U.S. has imposed an additional 25% tariff on Indian goods exported to the U.S., raising the total tariff rate to 50%. This move has escalated tensions between the two nations, as India has historically been a key ally of the U.S. in the region.

Indian refiners, who are among the largest buyers of Russian oil, are expected to decrease their purchases in the coming weeks. Major state-owned and private refineries in India anticipate buying 1.4 million to 1.6 million barrels of Russian oil per day during the shipping periods in October and beyond. This is a reduction from the 1.8 million barrels per day that India was importing from Russia in the first half of the year.

This move by India is seen as a compromise with the U.S., while also signaling that India does not intend to completely sever ties with Moscow. The decision to reduce oil purchases is contingent on the outcome of trade negotiations between India and the U.S. If a trade agreement is reached and the U.S. eases its pressure on India regarding the Russia-Ukraine conflict, the purchase quantities could be adjusted accordingly.

The U.S. tariff exemption on Indian goods is set to expire soon, and the situation is being closely monitored by market observers. India's leadership has emphasized the need for the country to achieve self-sufficiency in industrial production, a resolve that has been strengthened by the recent tariff hike. The Indian government has criticized the U.S. tariff increase as "unfair, unjust, and unreasonable," and has pledged to take necessary measures to safeguard its interests.

The impact of the U.S. tariff hike on India's economy, particularly its oil and gas sector, is expected to be significant. India is one of the world's largest importers of Russian oil, and a reduction in purchases could have widespread consequences for both countries. The Indian government has been exploring alternative oil sources, including from the Middle East and Africa, to mitigate the effects of the U.S. tariff increase.

The reduction in India's purchases of Russian oil could also affect global oil prices. As India decreases its reliance on Russian oil, there may be an increased demand for oil from other sources, potentially driving up prices. This could have a ripple effect on other oil-producing countries and global energy markets.

The U.S. tariff hike on Indian goods underscores the growing tensions between the two nations. While the U.S. has been pressuring India to stop its oil imports from Russia, India has resisted these demands, citing its need for energy security. The recent tariff hike is likely to further strain relations between the two countries, with potential significant implications for global trade and energy markets.