The Pulse | Diplomacy | South Asia

Uncertainty Looms as US Sanctions Waiver for India Expires

The geopolitical uncertainties in the Gulf have created new opportunities for India and Russia to strengthen ties.

The Trump administration’s temporary lifting of sanctions on India for its purchase of Russian oil expired last week. However, there is little clarity over whether Washington will extend the waiver.

It was in August last year that U.S. President Donald Trump announced the imposition of a 25 percent punitive tariff on India for buying discounted Russian crude oil that he alleged was funding Moscow’s war against Ukraine. This was amid American efforts to bring Russia and Ukraine to the negotiating table.

The punitive tariff was in addition to the 25 percent tariff Washington had imposed on India months earlier for running a trade surplus with the U.S. Taken together, the 50 percent tariffs were among the highest imposed by Trump on any country other than Brazil, and it had a serious dampening effect on India-U.S. ties that had seen an unprecedented level of growth and warmth since the year 2000.

However, with the U.S and Israel attack on Iran on February 28, and Tehran’s subsequent decision to halt the passage of oil tankers through the Strait of Hormuz, the world was hit by a severe shortage of crude and a consequent surge in global oil prices.

Amid this crisis, the U.S. permitted a temporary waiver of sanctions on India, enabling it to purchase oil from Russia. “To ease the temporary gap of oil around the world, we have given them permission to accept Russian oil,” Trump said.

The waiver is helping India rework its energy ties with Russia. Indian state-run oil firms and private refiners, who had gradually reduced imports from Russia due to U.S. pressure in January this year, quickly reversed their strategy and began buying more oil from Russian companies.

Energy trade was a key subject on the talks table when Russian First Deputy Prime Minister Dennis Manturov visited New Delhi on April 2-3. Both Indian and Russian readouts on the visit confirmed this. The readouts also listed other areas for strengthening cooperation like trade, industry, energy, fertilizers, connectivity and mobility in addition to new opportunities in technology, innovation, and critical minerals.

The third-largest importer and consumer of oil in the world, India imports 85 percent of its crude oil requirements, with 50 percent of that coming from West Asia. It is also the world’s fourth-largest refiner and fifth-largest exporter of petroleum products, supplying refined fuel to over 150 countries. India’s daily crude oil consumption is 5.5 million barrels, a government statement said last month.

With energy supplies from West Asia hit hard by the Iran war, India has once again turned to Russia. This time though, India has had to pay substantially more for Russian energy than it did in 2022, when New Delhi picked up substantial quantities of discounted Russian crude after the start of the Ukraine war. Russian crude oil now costs more than Brent crude, according to a Reuters report.

India cutting its oil imports from Russia at the insistence of the U.S. did put New Delhi in a tough spot. On the one hand, India has had close ties with Russia for several decades. On the other hand, India was hard-pressed to keep relations with the U.S., an important strategic and trade partner, steady as it is still working out a trade deal with the Trump administration.

Trump........

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