- Category
- Latest news
Tariffs and Sanctions Force Russia to Cut Oil Prices for India and China
- Authors
![Photo of Cyril Barabaltchouk]( "Photo of Cyril Barabaltchouk")
-72b63a4e0c8c475ad81fe3eed3f63729.jpeg "Photo of Cyril Barabaltchouk")
The 50% tariffs imposed by the US on India, along with European Union sanctions on India’s Rosneft refinery, have unintentionally increased the discount on Russian oil, making it even cheaper for largest buyers of Russian oil, including China, which has started intercepting some of India’s supplies, The Moscow Times reported on September 2.
Washington has previously accused India of exploiting discounted Russian oil, purchasing it at a lower price and selling the refined products at market rates, thereby financially supporting “Putin’s war machine.”
Experts say this outcome is ultimately beneficial for the West, as the goal is to reduce Russia’s earnings from oil sales. According to Bloomberg, the discount on Urals crude has risen to $3-4 per barrel compared to Brent, taking delivery costs into account. This increase is in contrast to the $2.5 discount last week and just $1 in July.
Compared to Oman’s oil, Russia is offering a $7 per barrel discount, which makes it hard for Indian refineries to turn down, The Wall Street Journal reports. Currently, Urals costs $1 less per barrel than when the White House threatened to raise tariffs from 25% to 50%.
The attractive discounts and some uncertainty among Indian refiners in early August led to Chinese companies purchasing Urals, traditionally buying other grades of oil, such as Far Eastern and Arctic varieties.
Chinese oil imports for October surged nearly tenfold, from 50,000 to almost 420,000 barrels per day, according to Tom Reed, Vice President of Argus Media, The Moscow Times reports.
Former Trump trade advisor Peter Navarro and US Treasury Secretary Scott Bessent have voiced criticism of India’s actions. In response, Indian Oil Minister Hardeep Puri defended his country’s purchases, stating that buying Russian oil helped avoid a catastrophic spike in global oil prices.
Puri added that India is abiding by international norms, respecting the price cap, and should not be accused of “laundering” Russian oil.
Sergey Guriev, Dean of the London School of Economics, argued that the ban on Russian oil purchases only drives prices up. “Western sanctions and the price cap were introduced to prevent the Kremlin from profiting,” Guriev said. “India can earn, but Russia cannot,” he noted.
Previously, it was reported that Saudi Aramco and Iraq’s state oil company SOMO have suspended crude oil sales to India’s Nayara Energy following European Union sanctions imposed in July against the Russian-backed refiner.
-6c7b568bf1f65853b7afd9dc1c3ca1fe.jpeg)
