The US wants to squeeze Russian supplies, but not by so much as to send crude prices spiralling over current levels of around $100 a barrel | Photo Credit: YORUK ISIK

The Lindsey O Graham Sanctioning Russia and Iran Act of 2026, which came into effect last week, empowers President Trump to impose up to 100 per cent tariff on the top five buyers of Russian energy products, if the countries concerned do not back down and satisfy the US that they will stop buying from Russia.

The Ministry of External Affairs has responded well by saying that India will secure its ‘trade and economic interests’ and source its needs accordingly. The Trump administration is nothing if it is not whimsical. It may seek to leverage concessions for the trade pact, as a quid pro quo for relaxing a law that gives the President powers to relax its penal provisions. However, Trump can go back on his word, as he has done with countries that have inked deals with the US. Therefore, the prospect of dealing with a 100 per cent hike need not influence India’s decisions now. There are also reasons to believe that the law, harsh as it appears, may not be strongly enforced. Trump has advised Ukraine not to attack Russian refineries for fear of causing a shortage and ‘hurting the world’. So, the US wants to squeeze Russian supplies, but not by so much as to send crude prices spiralling over current levels of around $100 a barrel.

The US would surely be aware that rising prices will spur shadow shipments of discounted Russian oil. These have continued, despite Western efforts to stop them. The law may come up for review after 180 days, and India can wait it out. At the outset, it puts India and China in the line of fire for being among the top five importers of many energy products. According to the Centre for Research on Energy and Clean Air, the top buyers of Russian oil since the Ukraine war broke out in 2022 are China (about 50 per cent), India (37 per cent), Turkiye (5 per cent) and EU (5 per cent). In the case of LNG, however, EU accounts for 49 per cent of Russian exports, followed by China (24 per cent), Japan (18 per cent) and South Korea (6 per cent). China (37 per cent), India (19 per cent), Turkiye (15 per cent), South Korea (12 per cent) and Vietnam (4 per cent) top the list of top buyers of Russian coal. For natural gas, the penal tariff will apply on countries that account for more than 15 per cent of Russia’s gas exports over the preceding year.

This possibly lets off the EU, whose share in Russia’s exports of LNG has fallen. For other importing categories, the law applies if countries ‘knowingly’ make purchases of Russian energy 30 days following the enactment, and have been among the top five importers over the last year. However, China is too powerful to be openly targeted. India’s purchases of Russian crude have dipped from July’s high of 2.8 million barrels per day (51 per cent of its total crude imports), to 2.1 million bpd in August and 1.4 million bpd so far in September, according to private data sources such as Kpler. A declining trend may not entitle India to a reprieve. India should be pragmatic and pursue all trade options.

Published on September 20, 2026