Treasury Secretary Scott Bessent on Tuesday accused India of profiteering from low cost Russian oil imports throughout the battle in Ukraine, describing the apply as “arbitrage” and condemning it as unacceptable.
“They’re simply profiteering. They’re reselling,” Bessent instructed CNBC’s “Squawk Field” in an interview. “That is what I’d name the Indian arbitrage — shopping for low cost Russian oil, reselling it as product.”
India buys Russian oil that’s bought at a reduction because of sanctions, refines it into gasoline and diesel, after which sells the product again to areas which have sanctioned Russia resembling Europe, stated Matt Smith, an oil analyst at Kpler.
India’s imports of Russian oil have surged because the Kremlin launched its full scale invasion of Ukraine in February 2022. Previous to the invasion, India imported a miniscule quantity of Russian crude.
New Delhi is now Russia’s greatest buyer importing 1.5 million bpd in July, in keeping with information from Kpler. China is the second largest purchaser of Russian oil, importing about 1 million bpd final month.
President Donald Trump earlier this month ordered an extra 25% tariff on Indian exports to the U.S. to punish New Delhi for purchasing Russian oil. The tariffs take impact subsequent week.
Trump is threatening what he calls “secondary tariffs” on Russian oil patrons like India to strain the Kremlin to achieve a negotiated settlement with Ukraine. Up to now, nevertheless, the U.S. has spared China from secondary tariffs over its imports of Russian crude.
When requested about China’s imports, Bessent steered that Beijing’s imports had been much less egregious within the eyes of the Trump administration as a result of it was additionally a significant purchaser earlier than Russia invaded Ukraine.
However India really began shopping for Russian oil in a significant manner on the behest of the U.S., stated Bob McNally, president of Rapidan Power and a former advisor to President George W. Bush.
The Biden administration had requested India to just accept Russian oil as different nations imposed bans with a view to forestall a significant oil worth spike after the invasion Ukraine that might end in excessive gasoline costs within the U.S., McNally instructed CNBC.
“India performed a key position within the worth cap sanction mechanism designed by the U.S. and its European allies to make sure Russian oil nonetheless flowed whereas attempting to crimp the income Moscow earned,” McNally stated.
CNBC has reached out to the Indian embassy within the U.S. for remark.