US Strikes Russian Diesel Deal Despite Sanctions on Other Buyers

Russia invaded Ukraine in 2022. Western countries then stopped buying most Russian crude oil. Russia had to sell its oil at lower prices. India started buying this cheaper oil in large amounts. Russia has become India's single largest source of crude oil. Diesel is very important in this story. It powers trucks, farm equipment and construction machinery. When diesel prices rise, the cost of living goes up for ordinary people everywhere, including in the United States.

India introduced the Special Additional Excise Duty (SAED) in 2022 to manage this energy shock at home. This is 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 do two things at the same time. It lets Indian refiners earn money from high global fuel prices. It also makes sure enough fuel stays available for Indian consumers.

The United States pressured India for over a year to cut its Russian oil purchases. It used extra tariffs and a new law. This law lets the US President impose tariffs of up to 100% on major buyers of Russian energy. Conflict in West Asia separately disrupted oil and fuel shipping. The Strait of Hormuz is a narrow sea passage between the Persian Gulf and the Arabian Sea. A large share of the world's oil moves through it. This tightened diesel supplies and kept prices high across the US and Europe. This set the stage for the US's own change of approach.

The Sumed pipeline is an overland pipeline route through Egypt. It bypasses the Suez Canal. It provides an alternative shipping corridor for oil and gas from the Persian Gulf to European markets.