Trump’s threat of penalty puts India in a liaison on Russian oil

India sails a delicate balancing act after US President Donald Trump threatened a “penalty” on his continuous Russian oil imports – a trade that New Delhi seems reluctant to end any soon.

Although Trump told journalists on Friday that he “heard” India interrupting the purchases, New Delhi officials remained unrepected. The spokesman for the Ministry of Foreign Affairs, Randir Jaiswal, said that the country decides on its sources of energy import “according to the price at which oil is available on the international market and according to the world situation at the time”.

“The Indians must have some confusion” after Trump’s threat – a reversal of the more tolerant approach adopted by the Biden administration, Bob McNally, president of the Consulting Consulting Rapidan Energy Group, told “Squawk Box Asia” of CNBC.

“Now we are going back and say,” What are you doing by taking all this Russian oil? “” Said McNally.

In March 2022 – A month after Russia launched its large -scale invasion of Ukraine – Daleep Singh, former deputy adviser for American national security for the international economy in the Biden administration, would have declared that “friends do not set red lines” and “there is no prohibition on energy imports from Russia”.

“What we would not want to see is a rapid acceleration of imports from India from Russia with regard to energy or any other export which is currently prohibited by us or other aspects of the international sanctions regime,” said Singh.

On July 30, Trump announced that India would face a price of 25% from August 1, as well as a “penalty” not specified for the purchase of Russian oil and military equipment.

But analysts suggest that India, which is the third energy consumer in the world, does not flash. Reuters said that there was no immediate change provided for India long -term contracts with Russian suppliers, citing two anonymous Indian government sources who did not want to be identified due to the sensitivity of the issue.

Russia has become the main oil supplier in India since the start of the war in Ukraine, going from just under 100,000 barrels per day before the invasion, a share of 2.5% of total imports, to more than 1.8 million barrels per day in 2023, or 39%. According to the International Energy Agency, 70% of Russian gross was exported to India in 2024.

The Minister of India of Energy, Hardeep Singh Puri, defended the actions of New Delhi in an interview of July 10 with CNBC, saying that she helped stabilize the world prices and was even encouraged by the United States

“If people or countries had stopped buying at this stage, the price of oil would have increased a barrel to 130 dollars. It was a situation in which we were advised, including by our friends in the United States, to buy Russian oil, but in the price ceiling.”

Russian oil exports had been capped at $ 60 per barrel in December 2022 by the group of seven countries, representing the best economies in the world, while the European Union had lowered the price ceiling to just over $ 47 per barrel in July.

However, the pressure rises. Vishnu Varathan, director general at Mizuho Securities, said that American threats presented a “clear and present danger” for India. He said New Delhi is likely to remain without commitment to oil purchases because he assesses the compromises of this “Russian option” as a negotiation currency.

India will have to browse the global market for good oil deals comparable to Russian oil, Varathan, who is also the head of macro research for Asia ex-Japan.

New Delhi could explore alternatives, including Iran – if an exemption from the United States can be negotiated – as well as some other producers “inside or outside the OPEC + that have been pressed by the United States,” said Varathan.

The OPEC + Bloc had agreed on Sunday to increase the production of 547,000 barrels per day in September, while concerns are mounted on the potential disruption of the offer linked to Russia.

India will face a difficult choice, said McNally from Rapidan.

“Trump is serious. He’s frustrated by Putin … India will have a difficult choice to make, but it is difficult to see them continue to import this million and a half of Russian raw barrels (Donald Trump decides to really put the whole relationship on the line.”