Trump's New Tariff Threat Imperils Asia's Russian Oil Lifeline Amid Faltering Gulf Supplies

Proposed US tariffs on major buyers of Russian oil threaten to constrict a vital crude source for India and China as global markets tighten due to disruptions in Gulf supply. The US House of Representatives authorized President Donald Trump to impose tariffs of up to 100 per cent on any of the five largest purchasers of Russian crude or gas who knowingly book new cargo. Passed with a 262-159 vote on Wednesday, the Lindsey O Graham Sanctioning Russia and Iran Act is expected to be signed by Mr Trump, with penalties potentially taking effect 30 days post-enactment.

Market analysts suggest the threat alone could accelerate near-term acquisitions. Rachel Ziemba of Ziemba Insights noted that buyers might front-load purchases to get ahead of potential future risks, further cementing Russia's position as a primary alternative to Middle Eastern supply. Sumit Ritolia, lead analyst at Kpler, emphasized that replacing Russian crude at current volumes would prove exceedingly difficult or impossible.

The late Republican Senator from South Carolina, Lindsey Graham, spent over a year advocating for this leverage. In a July 2025 interview with Fox News, he criticized China, India, and Brazil, declaring that purchasing cheap Russian oil to sustain the war constitutes blood money and threatens severe economic consequences. Subsequent to a 25 per cent duty imposed by Mr Trump on Indian goods in August, Mr Graham remarked that India was bearing the cost of supporting Vladimir Putin. His initial bill, featuring a 500 per cent rate, had stalled for 15 months.

Data from Kpler indicates that total Russian exports reached 6.79 million barrels per day in August, down from a peak of 8 million bpd in May. In India, Russian crude accounted for nearly 50 per cent of imports by July, totaling 2.96 million bpd, while Middle East imports dropped 63 per cent to 1.26 million bpd. US Census Bureau data revealed a $28.4 billion US trade deficit with India in the first seven months of the year, compared to a $91.2 billion gap with China. Tariffs targeting Russian oil could also impact broader Indian exports, such as electrical machinery and smartphones assembled for American brands like Apple.

In China, Russian crude imports decreased by 15 per cent since February to 1.89 million bpd, though their share of total imports rose to 22 per cent amid declining Gulf supplies. An additional 800,000 bpd of Russian crude is delivered to China via pipeline under long-term contracts exempt from seaborne tariffs. Meanwhile, the broader oil market remains constrained, with Brent exceeding $100 for seven consecutive sessions, alongside reduced traffic through the Strait of Hormuz and disruptions to Saudi Arabia's East West Pipeline and Bab Al Mandeb strait.

India's Ministry of External Affairs responded firmly on September 17, stating that the nation remains committed to its 1.4 billion citizens' energy security and will protect its trade interests. Conversely, Washington's stance remains nuanced. Neil Quilliam, associate fellow at Chatham House, noted that the White House may proceed cautiously to avoid exacerbating global supply constraints, pushing prices higher, and impacting domestic popularity ratings.

China might also defer immediate tariffs, with reports indicating planned duties could be withheld until Mr Trump meets President Xi Jinping. Janiv Shah, vice president for oil at Rystad Energy, expects refiners in China and India to seek exemptions, reduce spot purchases, and negotiate wider discounts rather than halt imports entirely, a dynamic that could prove mildly bullish for global oil prices.