Crude oil prices dipped but stabilized today, after rising to a three-week high on Monday as traders brace for the impact of the additional 25% tariffs that the Trump administration is set to impose on Indian imports from Wednesday.
At the time of writing, Brent crude was trading at $68.48 per barrel, with West Texas Intermediate at $64.46 per barrel, both slightly down from Monday’s close.
Indian exporters are already bracing for the tariffs, which would reach a total of 50% for all goods exported from the subcontinent to the United States. The tariff slap was President Trump’s idea to discourage Indian refiners from buying Russian crude oil, especially in such volumes as they are buying currently.
In an op-ed for the Financial Times, Energy Aspects’ Amrita Sen wrote today that the tariff move could backfire, pushing up international oil prices and fueling higher inflation in the United States.
“Indian imports of Russian crude average anywhere between 1.5-2mn barrels a day, based on OilX data,” Sen wrote. “If this were stopped overnight and India had to buy elsewhere, oil prices would jump massively and inflation would be pushed up in the US and elsewhere. For the oil market, the question is: does Trump have the stomach to raise prices on US consumers?”
India has reiterated it would continue buying oil based on price considerations and nothing else. Most recently, the Indian ambassador to Russia, Vinay Kumar, told local news agency TASS that “we have clearly stated that our objective is energy security of 1.4 billion people of India and India’s cooperation with Russia, as of several other countries, has helped to bring about stability in the oil market, global oil market.”
The diplomat added that “the trade takes place on commercial basis. So if the basis of commercial transaction trade imports are right, Indian companies will continue buying from wherever they get the best deal. So that’s what the current situation is.”
By Irina Slav for Oilprice.com
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