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The US tariffs on Indian oil imports were triggered by the peace talks in Ukraine and India's Russian oil imports
India, which is the third largest oil consumer in the world and also the biggest buyer of Russian crude oil by sea, has been caught up in the diplomatic negotiations between Russia, and the United States, to end the conflict in Ukraine. Why has Trump imposed additional tariffs on Indian goods? In retaliation against New Delhi's increased purchases of Russian oil, President Donald Trump has added an additional 25% to the tariffs already in place on Indian goods. This is among Washington's most severe. Peter Navarro, White House's trade adviser, said that India's purchases were funding the war of Moscow in Ukraine. He called for an end to these purchases. The Treasury Secretary Scott Bessent stated that India is profiting from its increased oil imports. These now account for 42% of the total purchases, up from less than 1% prior to the war. Washington called this a change in policy unacceptable. Trump's approach is in stark contrast to that of the former Biden Administration, which welcomed India's Russian purchases to keep oil prices in check, as they reached a high of $139 per barrel in 2022. Why is India buying Russian oil? Since the Ukraine War broke out in 2022, India and China are the largest Russian oil purchasers. The West has shunned Russian energy imports and set price caps for Russian oil. There is no prohibition on buying Russian oil as long as the deal meets the parameters of Western sanctions. The Indian government wants to reduce the massive import bill for crude oil and make energy affordable to its 1.4 million citizens. The import of Russian oil at discounted prices has also allowed India to diversify away from the more expensive Middle Eastern grades. India's energy import policy will be guided by its national interests. India imports more than 85% of the total oil it needs to refining its 5.2 million barrels of crude per day. Will India continue to buy Russian oil? People familiar with the situation said that India will not stop buying Russian oil for now due to concerns about energy security. According to LSEG data on trade flows, India's imports from Russia are expected to drop in September compared to August. This is because state refiners halted their purchases due smaller discounts. Indian refinery sources said that India's Russian crude oil imports will remain low as state-refiners do not want to purchase at discounted prices and instead are only interested in distressed cargoes. Trade sources reported that discounts for Russian Urals crude shipped to India are now about $2.50 a barrel compared to Brent dated, down from $20 to $25 per barrel at the start of the war in February 2022. Officials in India said that it would be difficult to replace Russian oil supplies because the price of barrels will increase significantly. How much oil does India buy from Russia? India imported 1,73 million barrels per day (bpd) of crude oil from Russia between January-July, which accounted for more than one third of India's overall imports. Due to logistical limitations, such as expensive and longer shipping routes, Russian oil accounted for only a fraction of India's total imports. After increasing its Russian imports, India has reduced its crude oil intake from Middle Eastern countries and African nations. Who are the top buyers of Russian oil in India? Reliance Industries, a private Indian refiner, and Nayara Energy, a private Indian energy company are the two largest buyers of Russian crude oil. Reliance owns the largest refinery in the world, while Nayara's majority is owned by Russian companies, including Rosneft. Reliance signed a contract for a set period of time with Rosneft. This is India's biggest oil import agreement with Russia. The two companies together account for approximately 60% of India's total Russian crude oil imports. State-run refineries, on the other hand, purchase Russian oil at spot prices and pay for it as delivered. Alternatives to Russian Oil In recent months, Indian companies have increased crude imports to the U.S. from the Middle East and Middle East to replace Russian supplies.
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Thames Water agrees to a payment plan for fines after a long battle with the administration
Thames Water, a British company, said that the regulator has given it breathing room to pay 123 million pounds ($166 millions) in fines. It continues to seek new funding and avoid temporary government nationalisation. The deal with the regulator Ofwat could delay payment of almost 100 million pounds owed by Thames Water until 2030. The government is ready to take the company into special administration if it fails to reach a deal. The water sector has been the target of public anger over the pollution of Britain's rivers and seas. It was fined in the past year for waste water pollution as well as dividend payments. Ofwat, the regulator, said Thames Water will pay an initial 20 percent of the fines within the next few weeks. The balance is due at the earliest possible date, which could be 30 days following its recapitalisation or, if the company enters SAR 30 days after exiting SAR. A backstop date for March 31, 2030, was also set. Lynn Parker, Ofwat's senior director for enforcement said: "This payment plan acknowledges the ongoing equity raising and recapitalisation processes." Thames Water stated in its statement that it "continues working closely with stakeholders" to ensure a market led recapitalisation, which includes its creditors taking a cut on their debt and investing new equity. The company has repeatedly warned that it must be lenient with fines and pollution goals to secure investment. The company could face fines of up to 1.4 billion pounds over the next 5 years. The government In July, Thames Water has announced plans to overhaul the water regulations. This could include giving companies a breathing space with regards to fines in order to avoid financial collapse. However, it is unclear whether these changes will be implemented on time to assist Thames Water.
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Rio Tinto splits into three units and names a new chief iron ore executive
Anglo-Australian mining company Rio Tinto announced on Wednesday it would streamline its operations into three separate business units: Iron Ore (ore), Aluminium & Lithium (ore), and Copper. Matthew Holcz will be appointed as the head of the consolidated Iron Ore division. The CEO Simon Trott is seeking to streamline the structure of the miner and focus its attention on its most lucrative assets. Holcz has been named the chief executive officer of the unified Iron Ore Division, which will integrate Rio Tinto's Western Australian iron ore operations with Canada's operations and Guinea’s Simandou Project upon completion. Jerome Pecresse will lead the Aluminium & Lithium division, which will include the recently acquired Arcadium Lithium operations, and Katie Jackson, who continues to oversee the Copper Division, will focus on Oyu Tolgoi’s ramp-up. Rio Tinto will transfer its Borates and Iron & Titanium business to the portfolio of the chief commercial officer for strategic review. Further updates about their future will be provided at a later date. This review follows on from a report in July that indicated Rio Tinto considered selling the titanium unit due to low prices and returns. The titanium business is part of Sinead Kaufman’s Minerals division. Rio Tinto announced that Kaufman would be leaving the company at the end October, after nearly 30 years.
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Source: India releases water from its dams and warns Pakistan about cross-border flooding
An Indian government source reported that India opened Wednesday all gates on major dams in its part Kashmir region after heavy rains and warned Pakistan about the possibility of downstream floods. Pakistan has confirmed that Islamabad was notified of the flood warning and issued an alert to three rivers flowing into Pakistan from India. In recent weeks, India and Pakistan's arch-rivals have been devastated by monsoon rainfall and flooding. According to Pakistani officials, the Punjab province in Pakistan's heartland faces an "exceptionally" high risk of flooding because of a combination heavy rains as well as the excess water India releases from its dams. The excess water then flows across Pakistan's border. Pakistan's Punjab is the breadbasket of Pakistan and home to more than half its 240,000,000 people. A source in India said that 200,000 cubic seconds of water could be released. One cusec is equal to 28 cubic litres per second or one cubic foot. The release of Indian water was not clear whether it would be an event that would happen once or in phases. On Tuesday, a Pakistani official in disaster management warned that India will release controlled amounts of water over the next few days. Pakistan claims that New Delhi has ignored two flood warnings issued by Pakistan since Sunday. Since a brief conflict that took place in May, the nuclear-armed nations are in a standoff. It is their most intense fighting in decades. Any flooding in Pakistan, which India blames on India, could further exacerbate relations. India releases excess water from its dams if they are too full. The excess flows into Pakistan as both nations share rivers. On Wednesday, Pakistani authorities called on army troops to assist in rescue and relief efforts in areas of Punjab Province that were already inundated. Pakistan started forced evacuations because of floods on Saturday. Flooding in Pakistani Punjab has displaced more than 167,000 people, including almost 40,000 who have left on their own accord following flood warnings issued since August 14. Since the beginning of the monsoon in late June, the death toll in Pakistan from flooding has reached 802, with half of those deaths occurring in just this month. Punjab was divided into two provinces when the two countries gained their independence in 1947. Asif Shahzad reported from Islamabad, and Krishna N Das edited the story in New Delhi.
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Instant View- Trump's tariffs against India are now in effect
The U.S. President Donald Trump doubled tariffs on Indian goods to up to 50% as planned on Wednesday. This escalated tensions between the two world's largest democracies. COMMENTARY: MADHAVI ARORA CHIEF ECONOMIST, EMKAY GLOBAL "While tariffs may add a downside tail risk to forecasts, it's too early to think about actual forecast changes." The impending global trade reset will not be easy, even though we are closely watching the results of the ongoing China-U.S. negotiations. The RBI and other EM central bankers may follow the U.S. Fed in the future, but will also have to deal with risk-aversion noise through financial market channels. UPASNA BHARDWAJ, CHIEF ECONOMIST, KOTAK MAHINDRA BANK: The onset of tariffs of 50% along with exemptions suggest an effective tariff of around 31%. We would see major disruptions in labour-intensive sectors such as gems, jewellery, textiles, etc. if these rates continued to rise throughout the year without any agreement. The high share of exports from micro, small and mid-sized enterprises is likely to further cloud the outlook for consumption and demand. Tariff increases could have a $25-50 billion impact on annualised GDP depending on their scale. We see a 20-30 bp risk of a downward revision to our current GDP estimation of 6.2%. TERESA JOHAN, LEAD ECONOMIST NIRMAL BANK INSITUTIONAL EQUITIES We estimate that the impact on GDP will be about 36 billion dollars or 0.9% annually. We believe that India is under increasing pressure to reach a deal as soon as possible, because the impact of a delay on the economy and the growth of labour-intensive sectors such as textiles, gems and jewelry is significant. Already there are reports of plant closures and dumping on the domestic market. "India may be willing to buy more U.S. weapons and oil, and reduce tariffs on some imports. However, agricultural products such as soybeans and dairy are still sensitive." RADHIKA RAO SENIOR ECONOMIST DBS BANK The impact of the second 25% duty, which will take effect on Wednesday, is asymmetrical. The central bank will be on alert for signs of growth risks, as well as possible relief in credit and liquidity. "Meanwhile other counterefforts will be crucial, such as seeking alternative markets and strengthening trade and investments ties via multilateral trade agreements as well as bilateral ones. The door to negotiations could reopen in the second half of the year, depending on other geopolitical events. RAJESWARI SENGUPTA ASSOCIATE Professor, INDIRA GANDHI INSTITUTE FOR DEVELOPMENT RESEARCH "The government needs to adopt a less protectionist, more trade-oriented strategy in order to increase the demand which is currently slack. To encourage trade and foreign direct investment, it could be beneficial to sign free trade agreements or regional agreements with several countries. Tariffs and other non-trade barriers can also be reduced. AASTHA GUDWANI IS THE INDIA CHIEF ECONOMIST AT BARCLAYS "We estimate that 70% ($55 billion), of India's imports from the United States, are under threat. This increases downside risks for growth. It has come a very long way from being a "good friend" to a "bad trading partner". SUJAN HAJRA, CHIEF ECONOMIST AND EXECUTIVE DIRECTOR OF THE ANAND RATHI GROUP "Washington’s 50% tariff is an annoyance, but not a major blow." India's trade surplus could increase by 0.5%, the growth rate could drop by half a point, and the rupee might weaken. Up to 2 million jobs could be at risk in near future. The bigger picture, however, is not as gloomy. India's export base, corporate earnings, and inflation outlook are all intact. And domestic demand is strong enough to cushion any blow. AAKANKSHA SHRAWAN ASSISTANTPROFESSOR, NATIONAL INSITUTE OF PUBLIC FINANCE and POLICY "The government must broaden its horizons, and take the right steps to position itself so that it can capitalize on India's most neglected component: services. "There is an urgent need for a re-examination of the government initiatives that are aimed at promoting India's service imports (Service Export from India Scheme; Software Technology Park Scheme; Digital India Internship Scheme); and governing bodies, such as Service Export Promotion Council (MEITY) and Service Export Promotion Council (SEPC)." Reporting by Tanvi, Kashish, and Nikunj Ahri. Editing by Muralikumar Anantharaman. Clarence Fernandez, and Lincoln Feast.
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Gold falls as the dollar strengthens, but Fed turmoil limits losses
Gold prices fell on Wednesday due to an increase in the dollar. However, renewed concerns about the independence of the U.S. Central Bank after President Donald Trump threatened to fire Federal Reserve governor Lisa Cook, lent support to gold. As of 0508 GMT spot gold was down by 0.5% to $3,375.06 an ounce after reaching its highest level since Tuesday, August 11. U.S. Gold Futures for December Delivery eased by 0.2% to $3425.30. Gold is less appealing to other currency holders because the dollar index has risen by about 0.3%. "Short-term investors are making a little profit now." Gold is still supported, especially now that we are starting to see the Federal Reserve adopt a more dovish position," said Kelvin Wong, senior market analyst at OANDA. We could still see in the near future that there is potential upward pressure for the level to reach $3,400. Above it will be $3,435." Trump announced that he would remove Cook due to alleged irregularities in the mortgage loan process, a move which could test the limits of the presidential authority over the U.S. Fed. Cook responded that Trump does not have the authority to dismiss her from central bank and she won't resign. Trump has repeatedly criticized Fed Chair Jerome Powell's slowness in acting and urged the U.S. Central Bank to reduce rates. The focus now shifts to Personal Consumption Expenditures Prices Index, the Fed’s preferred inflation measure, which is due on Friday, for more clues on the interest rate path following dovish comments from Powell at the Jackson Hole Symposium last week. According to CME FedWatch Tool, the markets are pricing in a 87% chance that the Fed will cut rates by a quarter point at its September 17 meeting. Gold that does not yield is usually a good investment in an environment with low interest rates. Other than that, silver spot fell 0.4%, to $38.42 an ounce. Platinum was unchanged at $1,348.20, and palladium rose 0.5%, to $1,098.96.
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Wall Street Journal, August 27,
These are the most popular stories from the Wall Street Journal. These stories have not been verified and we cannot vouch their accuracy. A senior Exxon Mobil executive talked with Rosneft in Russia this year about returning the Sakhalin Project if the U.S. gave the greenlight as part of the Ukraine peace process. Elon Musk’s SpaceX has launched its giant Starship for a 10th test flight, aiming to overcome setbacks in development and achieve long-awaited technical milestones that are key to the Mars Rocket's reusable construction. Cracker Barrel has announced that it will keep its old logo and scrap plans to create a new one after social media backlash including criticism from U.S. president Donald Trump. Stephen Miran, an economic advisor, and David Malpass, former World Bank Group president, are two potential candidates. - Trump Media & Technology Group, Crypto.com and a blank check acquisition company have agreed on a deal to launch a venture which will follow a treasury style strategy to acquire the native token of the cryptocurrency platform CRO. (Compiled by Bengaluru Newsroom)
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EU auto groups call for changes to CO2 emissions targets that are 'no more feasible'
The European Union's targets for reducing CO2 emissions are no longer achievable, according to the leaders of European automotive manufacturers and suppliers associations. The European Commission's President Ursula von der Leyen will host executives from the automotive industry on September 12, to discuss the future for the sector. This sector is under threat by both Chinese competition with electric vehicles, and U.S. Tariffs. In a letter sent to von der Leyen by Ola Kaellenius, the CEO of Mercedes-Benz, and Matthias Zink CEO at Schaeffler AG for powertrain and chassis, they said that they were committed in achieving EU's goal of net zero by 2050. They said that EU manufacturers are now dependent on Asia for their batteries. This is due to the uneven charging infrastructure and higher manufacturing costs, as well U.S. Tariffs. They argued that the bloc should go beyond targets for new vehicles, like 55% reductions in CO2 emissions from 2021 for cars, 50% for vans, by 2030, and 100% for both by 2020. Vans have a 9% market share in the new EU car market. Electric cars are around 15%. In today's world it is simply not possible to meet the rigid CO2 targets set for cars and vans in 2030 and 2035. They wrote that penalties and legal mandates would not be the driving force behind the transition. The letter stated that "EVs are the frontrunners but must be accompanied by (plug-in hybrid) vehicles, range-extenders, highly efficient internal combustion engine vehicles, and hydrogen and decarbonised fossil fuels." The two chiefs of associations said that CO2 regulations for heavy-duty trucks, buses and other vehicles must be reevaluated. The Commission decided in March to grant automakers an extra year to reach the CO2 reduction targets originally set for 2025. The centre-right group of von der Leyen has also called on the EU to lift its ban on combustion engine by 2035. Reporting by Philip Blenkinsop, Brussels Editor: Matthew Lewis
Manhunt for a 'heavily-armed' suspect continues in the Australian bush after two officers were shot dead
The police manhunt for a "heavily-armed" gunman in Australia's rugged alpine wilderness entered its second day on Tuesday after the gunman shot two officers dead and injured another while they were serving a warrant in his rural property.
Victoria Police said that the suspect gunman, Dezi Freeman (56), was a local with extensive bushcraft knowledge and multiple powerful firearms.
Mike Bush, Victoria Police Chief Commissioner, said that he could confirm the fact that the suspect in this horrifying incident is still on the loose.
The hunt will continue till we find him.
A team of 10 officers, including the Sexual Offences and Child Investigation Team, executed a search warrant on Tuesday at Freeman’s property in Porepunkah. Porepunkah is located about 300 km northeast of Melbourne.
Freeman, who is also known as "Filby", allegedly fired at the group, killing two detectives, one 59 years old and another 35 years old, and injuring another detective, before fleeing into dense bushland on foot, according to police.
Freeman's partner, children and their home were located by police safely over night amid speculation that they had been kidnapped.
Porepunkah, located at the foot of Australia's mountain ranges, is home to about 1,000 people.
Bush stated that the winter weather made it "hard going" for the police to search the area and that Freeman will "know the area better than we do".
Bush added that Freeman is "heavily-armed" and has multiple firearms, and advised the locals to stay inside.
Local media outlets reported the police believed Freeman to be a "sovereign" citizen who believes that the government is unlegitimate.
Freedman, according to court documents, campaigned for COVID-19 locksdowns in 2021 and tried to prosecute Dan Andrews then Victorian premier at the time. (Reporting and editing by Michael Perry in Sydney, Christine Chen from Sydney)
(source: Reuters)