India and China will not abandon Russian oil over Trump tariffs — experts
India is presently importing oil from around the world from nearly 40 countries ! Russia is today the Number One exporter to India accounting for 35%, Others being Iraq 19%, Saudi Arabia 14%, UAE 10% and USA 5% among the top 5, accounting for 83 % of the oil import. Total oil imports are nearly 5 mbld.
China is the largest importer with nearly 11 mbld, with USA in between with 6mbld. Both China and India will just not abandon their imports of Russian oil even if the United States imposes secondary tariffs on countries purchasing Russian commodities, experts interviewed believe. In their view, US President Donald Trump’s statement regarding such tariffs is unlikely to impact the market or the discount on Russian oil before September.
Given the already high level of tariffs in place and China’s overall geopolitical position, it will most likely seek to preserve as much of its current volume of Russian imports as possible.
Another analyst also does not anticipate a reduction in China’s oil purchases. “In our view, China, which is already in a state of ongoing trade war with the United States, is unlikely to respond in any meaningful way to threats or sanctions from Washington,” he noted.
However, it is pointed out that for the vast majority of other buyers of Russian energy, trade relations with the US are either more important or equally important as imports of Russian hydrocarbons. “This means that if Trump’s threats go beyond rhetoric, exports of Russian oil and petroleum products could decline by double digits, and the discount could return to the levels seen at the end of 2022,” he said.
Overall, experts consider that the introduction of tariffs is unlikely. Such harsh secondary sanctions still seem improbable, as evidenced by the relatively calm state of both the Russian stock market and the global oil market.
In recent months investors have grown less responsive to Trump’s statements, as they often turn out to be bluffs. The US’s sensitivity to oil price fluctuations further reduces the likelihood of harsh sanctions against Russia’s oil sector.
Experts do not expect any immediate impact on the market from the potential tariffs. “In any case, I don’t believe there will be any market impact before September, including on freight rates or prices for Russian crude grades,” emphasized one expert.
On July 14, US President Donald Trump announced that the United States would impose import tariffs of approximately 100% on Russia and its trading partners if Moscow and Washington fail to reach an agreement on a settlement in Ukraine within 50 days.
