Oil finds support from India-US trade deal

Brent crude’s price has moved higher after US President Donald Trump said that Washington will lower tariffs on Indian imports.

IMAGE: Flags of India and the US. Getty Images

Trump said that New Delhi has agreed to buy more of US oil and reduce Russian crude oil imports. In return, Washington will charge a reduced reciprocal tariff, lowering it from 25% to 18% now.

“He [Indian Prime Minister Narendra Modi] agreed to stop buying Russian Oil, and to buy much more from the United States and, potentially, Venezuela,” Trump said on social media platform Truth Social.

The news lifted oil prices by fuelling expectations of improved stability between the world’s two biggest economies.

“Indian refiners have already reduced their purchases of Russian oil, following US sanctions on Rosneft and Lukoil,” two analysts from ING Bank noted.

Despite sweeping Western sanctions on Moscow, India has emerged as one of the largest buyers of Russian crude since 2022, when Russia invaded Ukraine.

However, Indian imports of Russian crude have eased in recent months, falling to around 1.1–1.2 million b/d in January from about 1.8 million b/d in November last year, according to analysts at ING Bank.

“A lack of buyers means Russia would ultimately be forced to reduce output, tightening up the oil market,” ING Bank’s analysts added.

By Aparupa Mazumder

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