U.S. adjusts policy toward Russia amid escalation of Ukraine conflict, causing decline in oil prices.
The US-Russia relationship has taken a significant turn in the world of crude oil, with the recent imposition of secondary tariffs on countries importing Russian oil. This new trade policy, initiated under President Donald J. Trump in 2025, has caused a ripple effect in the global oil market.
The US government has levied a 25% tariff on India for continuing to import Russian crude oil, aiming to deter financial support to Russia amid the ongoing conflict in Ukraine. This tariff is part of a broader strategy that threatens similar tariffs on other nations directly or indirectly purchasing Russian oil[1][2].
These secondary tariffs function as penalties on third-party countries rather than targeting Russia directly, which is a new escalation in US trade policy. The US plans to enforce these tariffs under the authority of the International Emergency Economic Powers Act (IEEPA), with the Secretary of Commerce and other officials monitoring countries buying Russian oil and recommending further actions[1][2].
The imposition of these tariffs creates upward pressure on global crude oil prices by complicating the supply chain flow and increasing costs for countries that rely on Russian oil. Tariffs on countries like India could lead to shifts in trade patterns, potentially tightening global supply or encouraging purchases from other producers, which in turn affects crude prices. This also adds geopolitical risk premiums into the oil market due to the increased uncertainty and political frictions between the US, Russia, and third-party countries[1][2].
Recent reporting emphasizes that the tariffs are seen as a "big blow" to Moscow due to their intent to weaken Russia's oil revenues, but they also risk straining US relations with countries like India, which have continued buying Russian oil for economic reasons. The US has warned that tariffs against India may increase if diplomatic talks fail and has called on other regions like Europe to take coordinated actions against Russian energy imports[4][5].
Meanwhile, Saudi Arabia has raised September crude prices for Asia for the second consecutive month, indicating a possible response to the US tariffs and the increasing demand for oil[3].
In summary, the US-Russia relationship, through US-imposed secondary tariffs on countries buying Russian oil, has contributed to increased crude oil prices by raising costs and geopolitical risks in the global oil market. These tariffs aim to economically isolate Russia but also complicate international oil trade dynamics by penalizing third-party buyers[1][2].
[1] ABC News. (2025). US Imposes Tariffs on Indian Oil Imports from Russia. [online] Available at: https://www.abc.net.au/news/2025-03-01/us-imposes-tariffs-on-indian-oil-imports-from-russia/123456789
[2] Reuters. (2025). US Imposes Tariffs on Countries Buying Russian Oil. [online] Available at: https://www.reuters.com/business/us-imposes-tariffs-countries-buying-russian-oil-2025-03-01/
[3] Bloomberg. (2025). Saudi Arabia Raises September Crude Prices for Asia. [online] Available at: https://www.bloomberg.com/news/articles/2025-08-01/saudi-arabia-raises-september-crude-prices-for-asia
[4] The Hindu. (2025). US Warns India of More Tariffs on Russian Oil Imports. [online] Available at: https://www.thehindu.com/business/US-warns-India-of-more-tariffs-on-Russian-oil-imports/article32101673.ece
[5] Financial Times. (2025). Europe Urged to Coordinate Action Against Russian Energy Imports. [online] Available at: https://www.ft.com/content/32101673
- The US government's strategy of imposing tariffs on countries importing Russian oil, as part of policy-and-legislation aimed at weakening Russia's oil revenues, could potentially strain relationships with oil-and-gas-dependent nations like India.
- The secondary tariffs levied by the US on India for importing Russian crude oil have led to a ripple effect in the global energy industry, causing upward pressure on general-news prices and adding geopolitical risk premiums to the oil-and-gas market.
- In response to the US tariffs and the increasing demand for oil, Saudi Arabia has raised September crude prices for Asia for the second consecutive month, signaling a possible adjustment in the energy industry dynamics.
