Market not taking Trump threats seriously; glad India is standing its ground: Vandana Hari

Vandana Hari, Founder & CEO, Vanda Insights, says crude oil prices are declining. The market is seemingly unconcerned about Donald Trump's recent threat. India's continued oil purchases from Russia are a key factor. If India reduced its intake of 1.7-1.8 million barrels per day, it would create market instability. China might increase its intake, but not enough to offset India's current level.

With Trump trying to end Russia’s oil supply to the world, would that have a bearing on which way oil prices head and especially the India-Russia dynamic?
Vandana Hari: Based on the reaction we have seen so far from crude, which has been rolling downhill yesterday, and this morning as well, it tells me that the market is not taking Trump's threat seriously. Probably an input for the market is also the fact that India is standing its ground. Had India said that they are going to halt or reduce purchases of close to 1.7-1.8 million barrels per day, that would have been a major concern for the market as to where this 1.8 million barrels per day goes if India does not take it? Obviously, China could take a bit more. But I doubt it could take equal to what India has been absorbing from Russia or anytime soon and you would have seen prices spiking. So, the market does not seem to be taking it seriously and I am glad to note that India is standing its ground as well.

Well, yes, for now there’s not much of a movement on the crude oil prices. But if the sanctions take place because very strong comments are coming against India, and Donald Trump is also threatening to sanction the other nations as well that are importing oil from Russia, how do you see crude oil reacting to that? So far it has been quite a range-bound trading on the crude oil prices, but can it inch higher and go above that $72 per barrel mark?
Vandana Hari: A major question is whether he will actually go ahead. What is the gap between his threats and his actually proceeding to impose such tariffs? First of all, there are double standards here. You alluded to him potentially doing the same for other buyers of Russian crude and mind you, there are refined products as well. So, there is China and Turkey aside from India when it comes to crude and the same countries as well as major importers like Brazil and South America when it comes to refined products.


Now, as far as optics goes, this is not looking good for Trump singling out India when there are all of these other countries which are importing crude as well. Now, if he does go ahead and impose 100% secondary tariffs on India which would mean that the US would charge 100% tariffs for goods exported by India, India has a few options. One is it can simply ignore and let things take their course that the trade supply chains and so on will reorganise and rearrange themselves around such shocks.

India could look to other markets too to place its goods or it could go into negotiations with the US. Now, of course, it is not for me to say which step India will take on this but from all the signs that we can read, as of now India is saying it is standing its ground and that it will probably take steps or respond as and when the next step from the US becomes clear. There is no point making major shifts in things like crude imports based on guesswork or speculation.