Trump's plan for oil tap shutdown could increase prices for everyone

Trump's plan for oil tap shutdown could increase prices for everyone

The US President Donald Trump tries again to end the to end war in Ukraine -not by measures against Russia, but by sanctions against the countries that buy Russian oil. At the top of this list are china and India most important economies worldwide.

US sanctions against China and India

Trump announced that the United States could impose economic punishments to these countries if Russia does not agree to peace within 50 days. This could not only destabilize the two largest markets of Asia, but also have global effects by trying India and China to secure their oil supply and find alternative sources to avoid potentially high US tariffs or other sanctions

Russia's oil exports and the global economy

reactions to Trump's threat

So far, the oil markets have reacted only a little to Trump's threat, especially because of the uncertainty as to whether it will actually act and how. China was calm on Tuesday. A spokesman for the Chinese Ministry of Foreign Affairs said that "compulsion" could not end the conflict in Ukraine. India has not yet commented.

sanctions as a blunt tool

The application of high tariffs to stop the purchase of Russian oil would be a rough instrument - while this measure of Russia could significantly restrict war financing, it would also trigger chaos in other countries.

an unexpected plan from the White House

After the Russian attack on Ukraine, the United States, the United Kingdom and the European Union import bans and price upper limits imposed on Russian oil. Russia's exporters reacted quickly and redirected the currents of the large offer from west to east, while buyers, especially in China and India, increased their purchases of discounted oil.

a new tool of diplomacy

Trump, who has been back in the White House for six months, expressed his growing frustration about Putin's obvious disinterest in peace. A Bipartisaner draft law to collect a 500%customs on that of countries, the Russian energy or uranium Buy, had won on Momentum in the Senate. Supporting legislators described the draft as a "hammer" that Trump needs to end the war.

The implementation of secondary sanctions

On Monday, Trump announced his own plan by explaining that the United States would be "secondary tariffs". An official of the White House made it clear that Trump said secondary sanctions against other countries that buy Russian oil. "These are secondary sanctions, these are sanctions against countries that buy oil from Russia," said Matt Whitaker, the US ambassador at NATO.

oil imports and the need for alternatives

Russian crude oil makes 36 % of the imports of India and almost a fifth of China, which makes Russia the most important provider of both countries. If no more oil is bought from Russia, it would be a challenge to find a replacement. Opec has some capacities, but it would be difficult to ask you to promote 3.4 million barrels overnight.

global effects and Trump's interests

After all, rising oil prices could also put Trump under pressure. Analysts indicate that the limited production capacity and the limited reserves could make it difficult to keep oil prices low. This means that the United States could possibly extend deadlines to gain more time to increase deliveries.

a symbolic threat?

The announced punishments seem to pursue two goals: increase the pressure on Russia and mobilize the trading partners. NATO boss Mark Rutte called China, India and Brazil to contact Putin and to persuade him to seriously in the peace talks. However, observers agree that it is unlikely that Beijing and New Delhi Putin put pressure on or change their course as long as they are not sure how Ernst Trump's threats are.

Finally, it can be said that the upcoming measures will present Trump various challenges while trying to end the war in Ukraine and at the same time maintain balance in relationships with China and India.