‘India can’t switch off Russian oil overnight’: Why Trump paused 100% tariffs on crude

New Delhi: Acknowledging the difficulty India faces in reducing its dependence on Russian oil, US Secretary of State Marco Rubio has offered an explanation for President Donald Trump’s decision to temporarily waive sanctions and tariffs targeting major buyers of Russian energy. Washington now has 60 days to assess how the proposed penalties could affect energy supplies, international trade and the US economy. 

Speaking to reporters on Saturday (October 17) before leaving for Uzbekistan and India, he said that New Delhi had diversified its energy sources but still bought substantial quantities of Russian crude. He said India would find it difficult to move away from Russian supplies overnight and called the country an important US ally and partner.

“The problem is that these sanctions were not just sanctions on Russia. They include tariffs on a number of countries, India, for example, and others. And so I think the president wants to take the 60-day period of time to sort of analyse what imposing both sanctions and tariffs will mean to the global economy and even to the US economy,” Rubio said.

Trump announced the waiver on Friday (October 16) under the Lindsey O. Graham Sanctioning Russia and Iran Act. The law authorises sweeping penalties against Moscow and tariffs of up to 100 per cent on goods imported into the United States from major purchasers of Russian oil and natural gas, including India and China. He cited national interest in granting the waiver. 

Why Trump granted a 60-day waiver

Rubio said that the administration needed to account for several military confrontations affecting energy supplies and prices. These include the war involving the United States and Iran, Houthi attacks on Saudi Arabia and the ongoing war between Russia and Ukraine.

“I think when the bill was passed, one of the reasons the waivers were put in there is understanding that they would need some period of time to study this, given all the different things that are going on in the world right now,” he said.

He added that the administration needed to weigh the economic effects of sanctions and tariffs before deciding how to proceed. The proposed penalties could affect countries buying Russian energy and push up prices in international markets and the United States.

The waiver also comes after Trump announced plans for the United States to import diesel from Russia in an effort to ease domestic fuel prices ahead of the November midterm elections. The move puts energy costs along with the administration’s efforts to impose economic penalties on Moscow. 

Why India turned to Russian oil

India’s purchases of Russian crude increased considerably after Moscow invaded Ukraine in February 2022. Western sanctions and restrictions pushed several traditional buyers away from Russian oil. It led Moscow to redirect supplies towards Asian markets at discounted prices.

The European Union banned seaborne imports of Russian crude, while the G7 introduced a price cap intended to limit Russia’s oil revenue without cutting supplies from the international market. 

Russian Urals crude was offered at steep discounts to benchmark Brent during parts of 2023, with the discount at times approaching $40 per barrel.

Indian refiners increased purchases to take advantage of these prices. Russian crude, which accounted for around 2 per cent or less of India’s oil imports before the war, became a major source of supply. Russia eventually emerged as India’s largest crude supplier, at times accounting for around 40 to 50 per cent of imports.

India imported about 1.9 million barrels per day of Russian crude last month, equivalent to roughly 35 per cent of its total oil imports. 

India puts energy security first

New Delhi has repeatedly said its oil purchasing decisions are based on the need to secure supplies for a population of around 1.4 billion people. After the US Congress passed the sanctions legislation, the Ministry of External Affairs (MEA) said that India was “firmly committed” to ensuring energy security through diversified sourcing and changing market conditions.

“This issue has been discussed at high levels in recent months with various US interlocutors. Its potential implications for not just the bilateral relationship but also the international energy market have been very clearly articulated by the Indian side,” the MEA said in a statement on September 17.

“The Indian side has also made clear its determination to take all necessary measures to protect its trade and economic interests,” the ministry added.

Rubio’s comments came ahead of his visit to India, where energy supplies, trade and broader bilateral ties are expected to feature in talks. He said Washington would use the 60-day period to assess the effects of sanctions and tariffs and determine the appropriate course of action.