Highlights:

• U.S. imposes a 50% tariff on Indian goods, citing continued Russian oil imports.
• Oil prices remain largely unchanged as markets await India’s response.
• Indian refiners plan to slightly reduce Russian crude purchases; however, India signals no plans to halt the trade.

Market Response to Tariff Announcement

Oil prices remained relatively stable on Wednesday after a previous decline, as the market awaited the impact of new U.S. tariffs on India, the third-largest global crude consumer. The U.S. plans to double tariffs on Indian exports to 50%, citing India’s continued imports of discounted Russian oil amid Western sanctions following Russia’s invasion of Ukraine. Brent crude rose slightly to $67.24 per barrel, while WTI held at $63.25 after both fell over 2% on Tuesday.

Indian Refiners’ Response

In response to the tariffs, Indian refiners like Indian Oil and Bharat Petroleum have resumed buying Russian oil for upcoming months, raising doubts about the effectiveness of the tariffs. Analysts suggest the market will monitor Russian oil flows to India for further signals.

Broader Economic Implications

The tariff hike has led to a record drop in the Indian rupee and sharp declines in Sensex and Nifty, while also increasing costs for U.S. small businesses reliant on Indian goods. Private sector analysts warned that a sustained 50% tariff could weigh on India’s economy and corporate profits, prompting the steepest earnings downgrades in Asia.

Looking Ahead

The market remains in a fragile equilibrium, testing the tension between hopes for easier monetary policy and fears over fiscal credibility and political overreach. Future developments could swing sentiment sharply. Should legal challenges succeed in rolling back Cook’s removal, or if inflation data moderates, yields might ease. Conversely, new political interference or signals of further federal overreach could deepen the sell-off in Treasuries and exacerbate market anxiety.