Reliance flags crude supply risks amid US tariff blow on Indian exports

Reliance warns of refining margin pressure as US doubles tariffs on Indian goods to 50 per cent over Russian oil imports; 25 per cent came into effect on Thursday, second 25 per cent begins August 27

Indian oil major Reliance Industries has raised concerns that ongoing global tensions, including tariffs and sanctions, may disrupt oil trade and hit refining margins. 

In its latest annual report, the Mukesh Ambani-led company pointed to volatile crude prices driven by sanctions, shifting tariff rules, and output decisions by the Organisation of the Petroleum Exporting Countries (OPEC) and non-OPEC countries, news agency Reuters reported

 

Market reaction: Oil stocks slide

Shares of oil marketing firms dropped between 0.6 per cent and 2 per cent on Thursday amid a weak broader market. The Nifty 50 index was down 0.6 per cent, and Reliance Industries' stock slipped 1 per cent following new tariff announcements from the United States, Reuters reported.     

 

US imposes steep tariffs on India

The US has launched a new wave of tariffs targeting dozens of countries, with India facing some of the highest hikes. A 25 per cent tariff on Indian goods came into force on Thursday under a directive signed last week by President Donald Trump. 

In a further escalation, Trump announced an additional 25 per cent duty specifically targeting India’s energy ties with Russia — effectively doubling the tariff burden on Indian exports to 50 per cent. The second round of tariffs is scheduled to take effect on August 27.     

 

What’s in the executive order?

The latest order, titled ‘Further Modifying the Reciprocal Tariff Rates’, outlines revised duties on exports from nearly 70 countries:

• India: 50 per cent (after both rounds)

• Laos, Myanmar: 40 per cent

• Pakistan: 19 per cent

• Sri Lanka: 20 per cent

• UK: 10 per cent

• Japan: 15 per cent

 

The White House has accused India of violating sanctions through its “direct or indirect” imports of Russian crude oil, arguing that such trade undermines efforts to isolate Moscow amid the Ukraine war. “The Government of India is currently directly or indirectly importing Russian Federation oil,” the executive order stated. 

Trump justified the move under the International Emergency Economic Powers Act, claiming the action is “necessary and appropriate” to address the threat from Russia and uphold emergency measures first announced in 2022.

 

What’s covered and what’s exempt

Goods that are already shipped or cleared before September 17 will not face the new duties. But for everything else, the 25 per cent surcharge will apply on top of existing tariffs. 

The US has defined “indirect imports” as purchases through intermediaries or countries where the crude’s origin traces back to Russia.     

 

Economic impact: Growth under stress

According to Goldman Sachs, the fresh tariff hike could slow India’s economic growth. The firm estimates a 0.3 percentage point drop in annualised GDP growth, in addition to the 0.3 pp hit already expected from the earlier April 2025 tariffs. 

Once various exemptions are factored in, Goldman projects that the effective average tariff rate on Indian exports to the US will rise to around 32 per cent.