A revamped Russia sanctions bill has been filed by a bipartisan group of US senators. It calls for a 100% tax on commodities from the five biggest consumers of Russian gas and crude oil, including India.
The bill, which was first introduced by Senator Lindsey Graham before to his passing on July 12, called for a 500% levy on perhaps all buyers of Russian energy. The updated version excludes the majority of European nations and restricts its reach to the five biggest buyers: China, India, Hungary, Slovakia, and Azerbaijan.
Due to limited supply from West Asian suppliers and Moscow’s discounts, India’s imports of Russian crude reached a record 2.58 million barrels per day (bpd) in June. According to maritime intelligence service Kpler, about half of India’s total crude imports for the month came from Russia.
July imports have continued to be strong and may surpass June’s levels.
Additionally, the amended Bill gives US President Donald Trump the power to lift the sanctions if he believes it is in the country’s best interests.
New Delhi wants a tariff edge over other economies, and the law was proposed at a time when the US and India are having difficulty reaching a temporary trade agreement. The agreement will be inked when the timing is appropriate, Commerce Secretary Rajesh Agrawal stated on Monday.
Speaking on condition of anonymity, a government official stated that the current trade discussions had not taken the bipartisan Russia sanctions bill into consideration. According to the person, “all tariff-related concerns, including the bipartisan Bill, are expected to be addressed by the trade deal.”
The Global Trade Research Initiative (GTRI) founder, Ajay Srivastava, stated that even if the proposal passes the Senate, it is unlikely to become law and that India should continue to base its energy strategy on national interest and energy security. Instead of letting outside political pressure dictate its energy strategy, India should keep purchasing Russian oil, just like China does. He said, “Any attempt to impose such tariffs would almost certainly invite retaliation given China’s economic and strategic weight, making enforcement against Beijing far more difficult than the legislation suggests.”
According to economists, secondary taxes on Russian crude purchases would provide a serious obstacle for India, which presently imports almost half of its crude oil needs from Russia.
“India has an even greater issue. At the moment, there aren’t many other suppliers that can match Russian crude in terms of costs, size, and dependability. According to Sumit Ritolia, principal research analyst at Kpler, “Russian crude continues to be the most practical and competitive source of supply for Indian refiners, and under current market conditions, it is difficult to see those volumes disappearing from the system in the near term.”
Benchmark Brent crude increased to $85 per barrel on July 15 from about $75 per barrel a week earlier due to the intensifying hostilities between the United States and Iran.
According to Ritolia, any move to restrict Russian oil exports will further constrict the already limited global market. “It would be very difficult to replace Russian volumes at scale without causing a sharp increase in oil prices, with spare production capacity limited, Strait of Hormuz risks still elevated, and alternative supplies constrained,” he continued.
