US tariff on Russian oil buyers: Brace for possible $120 crude shock, warns CareEdge

The US Senate has approved a bill that allows President Donald Trump to impose tariffs of up to 100% on goods from countries that are among the top five importers of Russian oil and gas.

The bill was passed 86-11. China, India, Azerbaijan, Hungary and Slovakia are currently the top five importers.

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EXPORTS COULD TAKE A HIT

Gupta said the most direct impact would be on India’s exports to the US.

“India roughly exports $80 billion of merchandise goods, including gems and jewellery, textiles, and others. If there is indeed a 100% tariff, these items will become unviable, and there will be no takers in the US market.”

The bill provides for tariffs of up to 100%, but it is not yet clear how the measure would be applied across different commodities.

Gupta said products such as pharmaceuticals and electronics, which are “kind of non-discretionary” for the US, could face relatively lower tariffs. But he said there was no clarity yet.

“If it is indeed 100 per cent, it would be extremely difficult for Indian exporters to find viable business in the US market,” he said.

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CRUDE PRICE SHOCK

The bigger impact could come through India’s dependence on Russian crude, Gupta said.

Global crude consumption is currently around 100 million barrels a day. Russia accounts for about 9 million barrels a day, while the Strait of Hormuz accounts for about 20 million barrels a day and is already facing disruption, he said.

India and China together buy roughly 75% of Russia’s crude exports.

If both countries stop importing Russian crude because of the proposed tariffs, Gupta said the removal of a large share of global supply could send prices sharply higher.

“Removing up to 30% of global supply will cause a significant impact. The crude prices may see a significant jump,” he said.

Crude prices have recently remained relatively benign at around $70 to $85 a barrel. But if the scenario materialises, prices could “easily go beyond $100 or even $110 to $120 a barrel”, Gupta said.

That would have a direct impact on India’s external finances.

“It would cause India’s current account deficit to easily more than double from last year’s levels strictly on account of crude,” he said.

INFLATION RISK

Higher crude prices could also feed into domestic inflation.

At $110 to $120 a barrel, Gupta said, the government would have to pass on the increase to fuel pumps.

That, in turn, would create “a secondary inflationary impact across the broader economy.”

The US bill, formally renamed the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026, also extends until 2031 the Iran Sanctions Act of 1996, which penalises companies that invest in Iran’s energy sector.

The bipartisan legislation was championed by Republican Senator Lindsey Graham, who died on July 11, and Democrat Richard Blumenthal.

After Graham’s death following a trip to Kyiv, lawmakers from both parties pushed to advance the bill and honour his legacy as an ally of Ukraine.

The bill also seeks sanctions against Russian leaders and officials, including President Vladimir Putin, oligarchs and financial institutions.