US President Donald Trump on Thursday imposed fresh oil sanctions on Russia and the move also affects India. Oil prices jumped nearly 6% in the day’s trading session. Crude oil reached $61.75 per barrel and saw its first surge in the charts in six months. Trump’s sanctions have hit Russia hard, and India is on the losing side, as sales could fall to net zero.
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Crude Oil Supply From Russia To India Halted By Donald Trump
The flow of crude oil from Russia to India is set to fall to near zero, according to a latest report from Bloomberg. The development comes after US President Donald Trump tightened sanctions on Russia, making it difficult for refiners to purchase crude oil. Russian petroleum refinery companies Rosneft PJSC and Lukoil PJSC faced increased sanctions by the Trump administration.
Crude oil prices soared by nearly $3.5 per barrel as investors regained confidence in the commodity markets. India’s top refiners Bharat Petroleum, Hindustan Petroleum, and Indian Oil Corp will see a supply squeeze amid increased sanctions. Also, India’s privately-owned Reliance Industries has a long-term crude oil contract with Russia’s Rosneft refinery. All of these could come to a screeching halt as buying oil at discounted prices will be hit.
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India is the third-largest buyer of oil from Russia, and Trump is stopping sales in its tracks. Oil refiners from India can no longer avoid the Western banking system for procurement. The developing country switched to local currencies for procurement, avoiding the US dollar. They also saved nearly $7 billion in foreign exchange rates by using local currencies.
Despite several warnings by Trump, India continued purchasing crude oil from Russia at discounted rates. This made the White House impose 50% tariffs on India, kick-starting a trade war. The Modi administration is yet to respond to the tightening of the sanctions by the US.
