The US-India-Russia oil trade dispute escalated this week as US Treasury Secretary Scott Bessent openly criticised New Delhi for what he termed “opportunistic arbitrage” in its imports and re-exports of Russian oil.

In an interview with CNBC on Tuesday, Bessent said India’s sharp pivot to Russian crude since the Ukraine war had created room for profiteering at the expense of global sanctions regimes. Prior to the war, India sourced less than 1 percent of its crude from Russia; today, that figure stands at 42 percent.

According to Bessent, India has leveraged discounted Russian crude prices to resell processed oil products in international markets, pocketing as much as $16 billion in excess profits, while Moscow continues to fund its war in Ukraine.

He characterised the trade as unacceptable, framing it as a loophole undermining Western sanctions.

This friction follows Washington’s recent imposition of a 25 percent additional tariff on Indian exports, announced on August 6, which doubled the total tariff burden on Indian goods to 50 percent—the highest faced by any US trade partner.

The Biden administration’s trade policy had already strained ties with New Delhi, but under President Donald Trump’s return to office, the tariff strike has become one of the most contentious points in bilateral relations.

India, for its part, strongly denounced the tariffs as “unfair, unjustified, and unreasonable,” and warned it would take “all actions necessary” to safeguard its national interests.

Foreign policy analysts interpret this as a sign that India will seek avenues to bypass or mitigate Washington’s restrictions, possibly strengthening its energy and trade links with non-Western partners.

Despite Bessent’s harsh warning, pushback has emerged in Washington itself. Democrats on the House Foreign Affairs Committee underscored last week that targeting India does little to deter Russian President Vladimir Putin or curb his military campaign in Ukraine.

They emphasised that if Trump truly intends to weaken Moscow, a more effective approach would involve directly sanctioning the Kremlin and bolstering Ukraine’s battlefield capacity with robust military aid. “Tariffing India won’t stop Putin,” the Committee stated on social media, describing the administration’s strategy as “smoke and mirrors.”

Their remarks suggest internal divides over how best to balance sanction enforcement with preserving ties with an important strategic partner like India, particularly as Washington relies increasingly on New Delhi in the Indo-Pacific to counterbalance China.

Bessent, however, hinted at an even more aggressive approach, saying the US could escalate pressure with secondary tariffs and sanctions against Indian entities found dealing with Russian oil. He stressed that sanctions are inherently dynamic, subject to tightening, relaxing, or indefinite extension.

He also pointed to Russia’s so-called “shadow fleet” of tankers circumventing Western sanctions, calling for more coordinated international crackdowns.

Importantly, Bessent underscored that European cooperation is indispensable: while the G7 partners voice support, the US has long complained about Europe’s reluctance to enforce sweeping secondary sanctions, especially against China.

He recounted a G7 meeting where Washington’s proposal for a 200 percent secondary tariff on Chinese imports was met with palpable hesitation from European leaders—signalling deeper fault lines across the transatlantic alliance on how far to push sanctions-based strategies.

The tensions with India are unfolding even as US-Russia relations take an unexpected economic turn. During a joint press conference with Trump in Alaska on August 16, President Vladimir Putin highlighted that US-Russia bilateral trade increased by 20 percent since Trump’s return to office, a fact he celebrated as symbolic of potential future cooperation.

Putin spoke optimistically about joint ventures in trade, high-tech collaborations, space exploration, and Arctic development, framing these as opportunities to “turn the page” in Washington-Moscow relations.

While such rhetoric may reflect Russia’s desire to re-normalise ties amidst Western isolation, it also underscores the contradiction inherent in current US foreign policy: on one hand, Trump’s team is doubling down on punishing India for ties with Russia, while on the other hand, Trump himself is exploring avenues for improved trade relations with Moscow.

This creates a multidimensional dilemma for US policymakers. By aggressively penalising India, the administration risks alienating a key strategic ally central to its Indo-Pacific calculus.

At the same time, continuing energy trade between India and Russia provides Moscow with essential revenue streams, blunting the very sanctions Washington seeks to enforce. The fractured consensus within the US—between Trump’s Treasury Department and Congressional Democrats—further complicates policy coherence.

Moreover, the widening gap between the US and its European allies regarding secondary sanctions risks undermining the effectiveness of coordinated action against Russia.

In conclusion, the dispute over India’s Russian oil imports is no longer a narrow energy-trade issue—it highlights broader strains in the US-India strategic partnership, challenges the cohesion of the Western coalition on sanctions enforcement, and exposes contradictions in Washington’s foreign policy under Trump.

As sanctions and tariffs ratchet up, India is likely to double down on protecting its economic sovereignty, while the US grapples with reconciling punitive strategies against Russia’s war economy with its need to sustain critical partnerships in Asia.

The outcome of this stand-off will significantly influence global energy markets, the trajectory of the Ukraine conflict, and the balance of power within the emerging multipolar order.

Based On ANI Report