US sanctions, Indian oil and the new BRICS battle

The US President, Donald Trump, has signed the “Lindsey O Graham Sanctioning Russia and Iran Act of 2026”, earlier passed by the US House of Representatives, thereby eliminating the legal complexities associated with relying on executive orders. This new law empowers the US President to impose sanctions against not only Russia and Iran but also to slap penalties of up to 100 per cent tariffs on countries that import more than 15 per cent of Russia’s total global oil exports. Since India and China are specifically named as the top buyers of Russian oil and gas, the Act serves as a warning to them. India imports 37 per cent (a figure now estimated to reach 45 per cent) and China imports 50 per cent of the oil Russia sells globally; these imports are essential to meeting the needs of their respective populations.

Despite strong objections from India, China and Russia following the bill’s passage in the US House of Representatives, and India’s warning of potential negative impacts on bilateral relations and international energy markets, the US President has signed the bill into law without hesitation. The United States, having serious geopolitical differences with Russia, may legislate such laws for itself and its allies, boycotting Russian and Iranian oil, but it has no legitimacy in coercing other sovereign nations in this American pursuit with threats of tariffs on their exports to America, thereby jeopardising their trade. Other countries are free to meet the energy requirements of their populations, procuring it from the best and most cost-effective sources available.

According to the Petroleum Planning and Analysis Cell under the Ministry of Petroleum and Natural Gas, Government of India, between April and August 2026, crude oil imports stood at 100,669 thousand MT and LPG imports at 4,992 thousand MT.

TradeInt import data and ‘Bill of Lading’ databases indicate that in the early months of 2026, India sourced its crude oil imports as follows: Iraq (19.89 per cent), Russia (17.92 per cent), Saudi Arabia (16.03 per cent), UAE (11.00 per cent), New Zealand (6.95 per cent), Brazil (5.04 per cent), Angola (4.49 per cent), Nigeria (3.93 per cent), the USA (3.51 per cent), and Kuwait (2.93 per cent). However, the situation shifted during April-August 2026 due to major disruptions in shipments from Iraq, and by August 2026, total imports from Russia had risen to approximately 45 per cent. Replacing Russia, the USA presents itself as the alternative source of oil and gas.

But to India, not only is crude oil from the US costlier than that from Russia, but freight and logistics costs also rise due to the longer distance across the Atlantic compared to Russian tanker routes. Furthermore, Indian refineries are configured for Russian and Middle Eastern crude; processing American oil, which is different in quality, poses a challenge, requiring machinery adjustments/modifications. This is likely the case for China too. So, why shouldn’t India import oil from Russia? Why should India forgo cheaper Russian imports in favour of costlier ones from the US? This is precisely where the shoe pinches, with India spinning “strategic autonomy” to balance between the global forces for its trade in its national interest while the US coerces it into its own policies and geopolitical designs. This is the politics of “weaponising trade” against India and China, on the one hand, and a “trade war” against Russia and Iran, on the other. An interesting aspect of this legislation is that it exempts countries that purchase less than 15 per cent of Russia’s total global energy exports and are taking “significant steps” to reduce their imports from Russia. These countries include Japan, France, Belgium and other European nations that share the US policy on the Russia-Ukraine war. There is also a peculiar political dynamic in how Russian oil imports are assessed to exempt some countries: rather than assessing the percentage of Russian energy share in a country’s own total energy imports, the percentage of a country’s imports from Russia is assessed against Russia’s total global energy exports. Interestingly, Europe collectively remains the largest global buyer of Russian LNG, accounting for nearly half (49 per cent) of Russia’s worldwide shipments and contributing a significant portion of Russia’s gas revenue.

The intentions of the Act raise several questions, with answers inscribed within if read between the lines. If the purpose of this American legislation is to control Russia’s ‘war chest’, then why is there a condition of a 15 per cent threshold? In reality, the law and the US President’s prior decisions are part of global geopolitics, wherein European nations largely align with American policy, particularly on Ukraine’s bid for EU membership and the ensuing Russia-Ukraine war. Consequently, European countries are reducing their reliance on Russian oil and gas in accordance with their own foreign policy objectives; furthermore, geographically, Europe is much closer to the US than India or China are, resulting in significantly lower oil and gas transportation costs to them.

Thus, this legislation is clearly targeted at the BRICS nations — specifically India, China and Russia. The factors, such as Masoud Pezeshkian’s presence as a full member at the BRICS summit and the contents of the BRICS declaration condemning “unilateral coercive measures”, reaffirming the commitment to “multilateralism and multi-polarity”, emphasising “comprehensive reform of the UN Security Council”, acknowledging cross-border interoperability for payment and messaging channels, and promoting “trade settlement and investment using BRICS local currencies”, accelerated the passage of the bill by a bipartisan vote and the prompt signing of it into law by the American President. The rapid push to enact the bill, legalising the tariffs in a more stringent form, the later inclusion of Iran, and naming India and China as the top tariff targets can be viewed as an attempt to dampen the geopolitical and economic momentum generated by the BRICS-2026 New Delhi Declaration.

The law serves as a weapon to directly attack the alternative economic networks that BRICS members are striving to strengthen. BRICS, being a political and trade alliance, promises to use national currencies for mutual trade, avoiding threats from the dollar, unlike a military alliance of the ‘European Union’ that promises its members an attack on one as an attack on all.  The US President, as the strongest member of the ‘European Union’, has confused a ‘trade alliance’ with a ‘military alliance’. In this confusion, he wants to bulldoze BRICS, but he may not succeed. The 11 full-member countries and 10 partner-member countries, with nearly half the population and 40 per cent of the world’s GDP, constituting BRICS, can steer the world’s trajectory towards the Global South and become the ‘Rule Shaper’, avoiding escalating “differences into disputes”.

The writer is a former Professor at Guru Nanak Dev University, Amritsar, and former Vice-Chairman of INTACH; Views presented are personal.