"US Strikes Russian Diesel Deal After Pressuring India on Oil"
Special Additional Excise Duty (SAED)
a windfall tax on exports of diesel, petrol and jet fuel, revised fortnightly
OFAC general licence
a US Treasury authorisation allowing transactions otherwise barred by sanctions
Since Russia's invasion of Ukraine in 2022, Western countries have largely stopped buying Russian crude oil. This forced Russia to sell its oil at a discount. India began buying this cheaper oil in large volumes, and Russia has since become India's single largest source of crude oil. Diesel is a politically important fuel because it powers trucks, farm equipment and construction machinery, so a rise in its price quickly pushes up the cost of living for ordinary people.
India created its own domestic tool to manage this energy shock. In 2022, the government introduced the Special Additional Excise Duty (SAED), a windfall tax on exports of diesel, petrol and jet fuel. This duty is revised every two weeks based on global prices and refiners' profit margins. It tries to balance two goals: letting Indian refiners earn from high global fuel prices while making sure enough fuel stays available at home.
The United States has repeatedly pressured India to cut its Russian oil purchases. It has used additional tariffs and a law that lets the US President impose tariffs of up to 100% on major buyers of Russian energy. The ongoing conflict in West Asia has also disrupted oil and fuel shipping through the Strait of Hormuz (a narrow sea passage between the Persian Gulf and the Arabian Sea through which a large share of the world's oil moves), tightening diesel supplies further and keeping prices high across the US and Europe.
Sanctions on Russian energy work by making it hard for buyers to pay for or ship Russian oil and fuel without breaking US or European rules. But US law also allows exceptions. The Office of Foreign Assets Control (OFAC), a unit of the US Treasury, can issue a general licence that temporarily allows transactions that would otherwise be banned under sanctions. This is the exact tool the US used in its new Russian diesel arrangement: OFAC authorised the sale, delivery and import of Russian-origin diesel for a limited period, even as sanctions in principle still apply to other Russian energy trade.
This points to a deeper issue: who decides when sanctions apply and when they are set aside. …
'Energy security constitutes the dominant kingpin of India's foreign policy, and is linked with India's overarching influence in Middle Eastern countries.' How would you integrate energy security with India's foreign policy trajectories in the coming years?
The Strait of Hormuz, frequently mentioned in the context of global oil supply disruptions, connects which two water bodies?
Consider the following statements regarding the Special Additional Excise Duty (SAED) in India:
1.It is a windfall tax imposed on exports of diesel, petrol and aviation turbine fuel.
2.It is revised on a fortnightly basis.
3.It was introduced before Russia's 2022 invasion of Ukraine.
Which of the statements given above is/are correct?
With reference to India's crude oil imports since 2022, consider the following statements:
1.Western sanctions on Russia led to discounted Russian crude becoming available to buyers like India.
2.Russia has since become India's largest single source of crude oil.
Which of the statements given above is/are correct?
The Office of Foreign Assets Control (OFAC), often referred to in the context of US sanctions, functions under which of the following?
Want the full note, Prelims Facts & MCQ answers?
Create a free account — takes less than a minute.
Create free account