‘They are just profiteering…’: Trump administration fires fresh salvo on India for Russia crude trade; ‘…made $16 billion in excess profits’

The Donald Trump administration is continuing with its criticism of India’s crude oil trade with Russia, accusing the former of indirectly financing the Russia-Ukraine war and making profits.

US President Donald Trump has announced 25% additional tariffs on India for its purchase of Russian crude oil - these tariffs are effective Augsut 27.US Treasury Secretary Scott Bessent criticised India on Tuesday regarding its Russian oil purchases during the Ukraine conflict, labelling the trade strategy as "arbitrage" and expressing disapproval."They are just profiteering. They are reselling," Bessent told CNBC in an interview.

"This is what I would call the Indian arbitrage — buying cheap Russian oil, reselling it as product,” Bessent said."They've made $16 billion in excess profits — some of the richest families in India," he added.Also Read | Trump’s 25% additional tariffs loom: Indian refiners delay orders for Russian crude oil; take cautious approach

India’s crude oil trade with Russia

India's procurement of Russian oil has increased dramatically following Russia-Ukraine war that began in early 2022. Before this conflict, India's Russian crude purchases were negligible.According to Matt Smith, an oil market analyst at Kpler quoted in the CNBC report, India purchases discounted Russian oil because of sanctions, processes it into petrol and diesel, and subsequently exports these refined products to regions that have imposed sanctions on Moscow, including Europe.

Trump is proposing what he terms as "secondary tariffs" against nations like India that purchase Russian oil, aiming to compel the Russia towards a diplomatic resolution with Ukraine. However, the United States has thus far refrained from applying these secondary tariffs on China despite its continued Russian oil imports.Regarding Chinese oil purchases, Bessent noted that the Trump administration viewed Beijing's imports more favourably since China was already a significant customer before the Russia-Ukraine war.However, Bob McNally, who heads Rapidan Energy and previously advised President George W. Bush, explained that India's substantial Russian oil purchases were actually initiated at US's request.Also Read | Trump sees a ‘dead economy’ - but US-based S&P Global upgrades India’s credit rating - here’s whyMcNally told CNBC that the Biden administration specifically encouraged India to accept Russian oil whilst other nations implemented bans. This strategy aimed to prevent substantial oil price increases following the Ukraine invasion, which could have led to elevated petrol prices in the US.In August, India's Russian oil imports surged to 2 million barrels per day, with refiners maintaining their focus on cost-effective procurement strategies.According to Kpler, a global real-time data and analytics provider, Russian imports constituted 38% of India's total crude oil purchases, estimated at 5.2 million barrels per day during the initial two weeks of August.Russian supplies increased from 1.6 million bpd in July to 2 million bpd in August.

This rise coincided with reduced purchases from Iraq, which dropped to 730,000 bpd from 907 bpd in July, and Saudi Arabia, which decreased to 526,000 bpd from 700,000 bpd in the previous month.Kpler's data indicated that the United States ranked as the fifth largest supplier, contributing 264,000 bpd to India's oil imports.Also Read | ‘Russia lost an oil client, which is India’: What Donald Trump said before meet with Putin; ‘secondary sanctions would be devastating…’

India’s strong stance

India has reacted stroingly to Trump levying the additional tariffs. Earlier this month, the ministry of external affairs released a statement saying, “The United States has in recent days targeted India’s oil imports from Russia.

We have already made clear our position on these issues, including the fact that our imports are based on market factors and done with the overall objective of ensuring the energy security of 1.4 billion people of India.

”“It is therefore extremely unfortunate that the US should choose to impose additional tariffs on India for actions that several other countries are also taking in their own national interest.” the statement said.“We reiterate that these actions are unfair, unjustified and unreasonable. India will take all actions necessary to protect its national interests,” it concluded.