By Siyi Liu, Lewis Jackson and Alex Lawler
SINGAPORE/BEIJING (Reuters) -U.S. President Donald Trump’s threat to hit buyers of Russian oil with tariffs had a limited impact on oil markets on Monday, as traders tried to determine how far the White House could go after Chinese and Indian oil importers.
Trump’s proposal to hit buyers with a 25% to 50% tariff would be significant for oil markets if it turned into an order, but analysts and traders questioned whether the threat was just Trump showing one of many cards in his talks with Russia.
“He changes his mind, so the market is struggling to keep up,” said Adi Imsirovic, an energy consultant and former oil trader. “The market does not believe it any more until it is firm and a few weeks old.”
Oil made modest gains on Monday, with global benchmark Brent crude rising by 1.4% to above $74 a barrel. In early March, it fell to almost $68, the lowest since December 2021.
“As Trump yoyos in his decision-making, so do oil prices,” said David Goldman of brokerage Novion. “In the bigger picture, the correction from the selloff appears to have stalled, and the price is moving sideways.”
China and India are the major buyers of Russian crude, and their reaction would be crucial to making any secondary sanctions package seriously hurt the world’s second-largest oil exporter.
In the aftermath of Russia’s invasion of Ukraine in 2022, India surpassed China to become the biggest buyer of seaborne Russian crude.
Russian oil comprised about 35% of India’s total crude imports in 2024, raising the stakes for what has become a crucial outlet for Moscow if Trump exerts pressure on New Delhi.
In February, India’s oil secretary said the country’s refiners would buy Russian oil supplied by companies and ships not sanctioned by the U.S., effectively reducing the number of cargoes and vessels available.
Meanwhile Chinese state oil companies have shied away from Russian oil, with Sinopec and Zhenhua Oil halting purchases, while two others scaled back volumes in the face of renewed U.S. sanctions, Reuters has reported.
China’s top importers of Russian oil are independent refiners with limited ties to the U.S. financial system, which makes them more resilient to pressure and sanctions from Washington.
“There’s an element of fatigue with the announcements from the U.S. administration on tariffs and sanctions,” said ING’s head of commodities strategy Warren Patterson.
“So I suspect until we get something more concrete, the market is not going to overreact to this,” he said.
In India, a refinery official said the threat added uncertainty to the purchasing plans for Indian refiners and was creating difficulties for crude buyers.
Refiners have already tied up purchases for April and May, added the official, who was not authorised to speak publicly on the matter and asked not to be named.
China’s Ministry of Foreign Affairs said its cooperation with Russia is neither directed nor affected by third parties, in response to a question about the tariffs at a daily news briefing.
India’s oil ministry did not immediately respond to a request for comment.
If the tariffs became a serious threat, markets would look to how strictly the policy would be enforced and whether the Organization of the Petroleum Exporting Countries would ramp up production to make up for any drop in Russian exports, analysts said.
The secondary sanctions imposed on Venezuelan oil last week could serve as a model for markets to assess the impact of a similar set of policies against Russia, said Patterson.
Chinese buyers had already paused purchases ahead of those sanctions taking effect on Wednesday. Traders and analysts expect some sales to resume as buyers find workarounds unless Beijing issues a blanket ban.
(Reporting by Lewis Jackson in Beijing, Siyi Liu in Singapore, and Nidhi Verma in New Delhi; additional reporting from Joe Cash in Beijing and Alex Lawler; Editing by Sonali Paul, Ros Russell, Joe Bavier and Jan Harvey)
