Officials cautious as US Prez Trump warns of secondary levy on Russian oil

The government is closely monitoring the situation following US President Donald Trump’s threat to impose tariffs on nations purchasing Russian crude, officials said. Since the Ukraine war began, Russia has remained India’s largest source of crude oil.

 

Frustrated with Russian President Vladimir Putin over the sluggish pace of peace negotiations, Trump on Sunday warned of secondary sanctions against Russia, signalling that the US could impose a 25 per cent-50 per cent tariff on countries that continue buying Russian oil unless Putin agrees to a ceasefire in Ukraine.

 

Recently, Trump announced a 25 per cent blanket tariff on any nation purchasing oil and gas from Venezuela, effective April 2. “This is a new development in US-Russia relations, which have been marked by volatility over the past few years. The already unstable diplomatic landscape has now become even more unpredictable. We are evaluating the situation,” an official said. 

 

The latest threat by Trump has unsettled government officials, given that Russia accounted for 36.47 per cent of India’s crude imports by value in the first nine months of FY25, up from 33.71 per cent in the same period of FY24 and 16.72 per cent in FY23.

 

From holding less than a 1 per cent share in India’s oil import basket before the Ukraine conflict, Russia has surged to become the largest supplier, displacing traditional sources such as Saudi Arabia, the United Arab Emirates, and Kuwait.

 

Meanwhile, the US remains India’s largest export destination, with outbound trade reaching $60 billion in the April-December period of FY25, accounting for 18.62 per cent of total exports.

 

Within this, refined petroleum-related exports to the US stood at $3.15 billion in the first nine months of FY25. The US was the fourth-largest destination for Indian petroleum exports, behind the Netherlands ($10.89 billion), the United Arab Emirates ($ 4.74 billion), and Singapore ($3.83 billion).

 

Crude imports from Russia are already facing pressure. The then outgoing Joe Biden administration on January 10 announced its most sweeping sanctions package yet against Russia, targeting oil producers, shipping firms, intermediaries, traders, and ports.

 

The US Treasury Department imposed sanctions on Russian upstream oil and gas majors Gazprom Neft and Surgutneftegas. Of particular concern for India, Washington also blacklisted 183 vessels that have transported Russian crude, some potentially bound for India, along with a key Russian insurance provider.

 

Ready for exigencies

 

Oil marketing companies have previously navigated sudden policy shifts and geopolitical disruptions, the official noted. “There have been periods of decline in Russian crude imports, both in recent months and last year. Our importers are in continuous discussions with other producers,” he said.

 

Commerce Department data shows that crude imports from Russia fell 16.5 per cent month-on-month from the $12.4 billion worth of oil imported in November. The figures, which lag by three months, indicate that Russian crude shipments were already declining in value before the latest wave of US sanctions took effect in January.

 

In December 2024, imports from Russia fell for the first time in four months, dropping 18.48 per cent year-on-year to $3.19 billion from $3.92 billion in December 2023. Before December, Russian crude inflows had increased 8 per cent in November, 53 per cent in October, and 34.2 per cent in September. A temporary decline in August was attributed to scheduled maintenance shutdowns at major Indian refineries.