The biggest Indian state-owned refiners are pulling out of spot purchases of Russian crude for cargoes loading in October, sources familiar with the procurement plans told Bloomberg on Thursday, a day after the U.S. announced an additional 25% tariff on India over its imports of crude from Russia.
U.S. President Donald Trump signed on Wednesday an executive order enacting an additional 25% tariff on Indian goods, explicitly targeting India’s ongoing imports of Russian crude oil. This order increases the total tariff rate on Indian exports to the United States to 50%, the highest level for any country under current U.S. policy.
The 50% tariff on Indian goods will take effect 21 days after August 6.
The executive order also establishes a process for the potential imposition of similar tariffs on other countries that directly or indirectly import oil from the Russian Federation, the White House said.
India has said that the U.S. tariff of 50% due to India’s imports of Russian oil is “unfair, unjustified and unreasonable,” and its oil imports are based on market factors in view of ensuring energy security.
After the additional tariff was announced, state refiners Indian Oil Corporation Limited (IndianOil), Hindustan Petroleum Corporation Limited (HPCL), and Bharat Petroleum Corporation Ltd (BPCL) now plan to forego spot purchases until they have clear guidance from the Indian government, according to Bloomberg’s sources.
These refiners skipping the upcoming spot buying cycle will affect Russian supply of cargoes loading in October.
The bearish sentiment around Indian demand for Russian crude has deepened the discount of Russia’s flagship Urals crude to North Sea Dated Brent to $5 per barrel, according to estimates by energy analytics provider Kpler.
“Persisting uncertainty around US actions in regards to India will trigger more risk-averse behaviour from Indian state-owned and private refiners,” Kpler analysts said on Wednesday.
By Tsvetana Paraskova for Oilprice.com
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