New Delhi: Proposed US tariffs aimed at countries that purchase Russian crude risk adding fresh volatility to global oil markets, but swapping out Russian supply would be difficult given thin spare production capacity and continuing geopolitical risks, according to Sumit Ritolia, an analyst at Kpler. "Russian crude has become the country's strongest energy security hedge, particularly since the Strait of Hormuz disruptions," Ritolia said.
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US senators on Tuesday put forward a reworked bipartisan Russia sanctions bill that would penalise Russian officials while easing the tariffs originally proposed on countries buying Russian oil and gas. The revised measure caps the maximum tariff on Russia's five biggest energy buyers, among them China and India, at 100 percent, down from the 500 percent set out in the original bill introduced in April 2025.
The bill also carves out an exemption for countries whose purchases account for less than 15 percent of Russia's natural gas exports, provided they are taking meaningful steps to cut those imports.
Ritolia said Russia shipped roughly 2.6 million barrels per day (mbpd) of crude oil to India in June, making up over half of the country's total crude imports. Those volumes have climbed steadily since March, and July arrivals are on course to match or top June's levels, he added.
He said Russian crude has also served as a steadying influence on global oil markets, pointing out that earlier rounds of sanctions were structured to keep Russian oil flowing, so as to avoid pulling millions of barrels a day out of the market and pushing prices sharply upward.
"If secondary tariffs of 100 percent... were implemented in a way that materially reduced purchases of Russian crude, the market would first need to answer a simple question: where would the replacement barrels come from?" Ritolia said.
Given limited spare production capacity, lingering risks around the Strait of Hormuz and tight alternative supplies, he said displacing Russian exports on a large scale would be hard to achieve without setting off a sharp climb in oil prices.
For India specifically, options that could substitute for Russian crude at similar volumes, reliability and cost remain scarce, Ritolia said, which leaves Russian barrels the most workable supply source in present market conditions.
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While the proposed tariffs heighten geopolitical uncertainty, their eventual implementation and effect on global crude flows are far from settled, he said, cautioning that any policy that seriously disrupts Russian exports could squeeze an already tight oil market, with consequences reaching beyond India.