Trump also has India in his sights
Russia sanctions drive up oil prices
Oil prices have made a powerful jump. The background is new sanctions by the USA against the Russian oil companies Lukoil and Rosneft – pressure is now also growing on India.
Oil has suddenly become significantly more expensive again. The price for a barrel (159 liters) of Brent crude oil from the North Sea today temporarily jumped by more than five percent above the $66 mark. A barrel of the US WTI variety costs $61.51 at midday – an increase of 5.1 percent. According to analysts at Deutsche Bank, oil prices are heading for their biggest daily gain since July.
But what’s behind it? Experts point to the new US sanctions against large Russian oil companies. This affects the state-owned companies Rosneft and Lukoil as well as their subsidiaries – insofar as they are majority controlled by them.
Previous sanctions have rubbed off on Russia
All US assets of these companies are now frozen. US persons and companies are not permitted to do business with them unless specifically licensed. With this step, the Trump administration surprised the markets, emphasizes stock market expert Robert Rethfeld from Wellenreiter-Invest.
The aim of the new US sanctions is to reduce Russia’s oil revenues, which the country uses to finance its war of aggression against Ukraine. Despite all the previous sanctions, Russia is still one of the big players on the oil market. The country is the world’s second largest oil exporter after Saudi Arabia.
Trump is now threatening India Secondary sanctions?
But not only Russia itself and its oil companies are now coming under increasing pressure – but also the buyers of Russian oil. Above all, India. US President Trump said that Indian Prime Minister Narendra Modi had assured him in a phone call on Tuesday that India would “not buy a lot of oil from Russia” because he also wanted “an end to the war between Russia and Ukraine.”
There are so-called secondary sanctions from the USA, i.e. sanctions against foreign financial institutions and companies that do business with Russian oil companies.
Edward Fishman – a former high-ranking US State Department official who was responsible for the sanctions against Iran – emphasizes in an article on “Is there a risk of secondary sanctions?” Fishman expects “some withdrawal from Russian oil deals,” at least in the short term.
Indian refineries in turmoil
In fact, Indian state-owned refiners such as Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp are already reviewing their trading documents for Russian oil, Reuters news agency reported, citing insiders. They wanted to ensure that they did not receive any deliveries directly from the Russian companies Rosneft and Lukoil.
India’s largest buyer of Russian oil, Reliance Industries, is also considering a complete halt to imports from Russia, two people familiar with the discussions said. However, experts expect that some barrels will continue to come onto the market through intermediaries.
India is the second largest buyer of Russian oil
While previously only a small amount of Russian oil flowed to India, Russia has become India’s largest oil supplier in the wake of the war against Ukraine. In the first nine months of this year alone, around 1.7 million barrels of Russian shadow fleet oil flowed into India – per day.
Overall, India bought around 38 percent of all Russian oil exports from December 2022 to the end of September this year. Only China lost more at 47 percent, according to the independent research institute Center for Research on Energy and Clean Air (CREA).
The immense Indian purchases of Russian oil have long been a thorn in Trump’s side. They were one of the main reasons why the US President imposed punitive tariffs of 50 percent on most Indian imports to the US in August.
