Why in the News
Less than a month ago, the US President signed a law to punish buyers of Russian oil and gas. He has now agreed with the Russian President to release 36 million barrels of Russian diesel into global markets. The reversal strengthens India’s case to be judged by Washington’s own energy security standard, meaning assured access to affordable energy.
What did the Graham Act set out to do?
- What it is: The Lindsey O Graham Sanctioning Russia and Iran Act of 2026 sanctions and tariffs countries that buy Russian oil and gas. It is like fining a shop’s customers to cut the shopkeeper’s income.
- Why it was enacted: The law aims to choke off the energy revenue that funds Russia’s war in Ukraine.
- India as a target: India, a large buyer of Russian crude, is among the countries the Act targets.
- The takeaway: Washington’s declared policy is to cut Russia’s energy income, and buyers such as India are expected to bear the cost.
What does the diesel deal change?
- Sanctions undercut: Diesel sales earn Russia money, so the deal directly funds the war the Act aims to starve. It also undermines existing international sanctions on Russia.
- Stated aim: The US President says the deal will bring diesel prices down “for Americans and, indeed, the World”.
- Midterm motive: Polls show the Republican Party trailing the Democrats with midterm elections under three weeks away, so the likely goal is to placate voters.
- Doubtful price effect: Energy analysts doubt the deal will cut prices much, and many Republicans oppose it.
- Pressure on Ukraine: The US President has demanded that Kyiv suspend strikes on Russian oil refineries, which would weaken Ukraine’s leverage.
Why does the deal strengthen India’s hand?
- US criticism of India: India has faced repeated criticism from Washington over Russian energy imports, including from the US President and the US Treasury Secretary.
- Tariff penalty: An extra 25% US tariff on Indian goods, imposed as a penalty in August 2025, made Indian refiners cut purchases of Russian crude.
- Same yardstick: Energy security matters as much to India as to the US. New Delhi should ask that its energy needs and costs be judged by Washington’s own standards.
- India’s stated position: India says its purchases follow national interest and its people’s needs. It has also offered its own proposal to end the war and kept contact with both sides.
What is the lesson for Europe?
- Europe’s contradiction: Europe opposes the war but depends on Russian energy, and it is scrambling for a coordinated response.
- Funding both sides: The US Treasury Secretary said the European Union (EU) has given Russia more money than Ukraine, through its energy purchases.
- US tilt towards Moscow: The deal, earlier summits and offers of investment show the US President remains open to a rapprochement, a restoration of friendly ties, with Moscow.
- Strategic autonomy: Europe must strengthen its own defence capabilities. It must also cut its dependence on Russia for oil and gas and on the US for security.
Challenges
- Discount versus tariffs: Discounted Russian crude lowers India’s import bill, but continued buying exposes Indian exports to tariffs under the new US law.
- Selective enforcement: US sanctions policy shifts with American domestic politics, so India cannot predict which purchases will be penalised.
- Limited leverage: India and the US have still signed no trade agreement, so tariff relief stays tied to wider trade talks.
Way Forward
- Graham Act waiver: The Act lets the US President exempt a country. India should seek that waiver, citing Washington’s own diesel deal.
- Diversified crude sourcing: Indian refiners should widen supply from West Asia, the Americas and Africa, so no single supplier becomes leverage.
- Strategic reserves: India should expand its strategic petroleum reserves to cushion shocks from sudden sanctions changes.
Conclusion
Washington’s diesel deal shows domestic fuel prices shaping US sanctions policy, which weakens its case for penalising Indian purchases. Whether the US still enforces its new law against India after easing Russian supplies for itself is the test to watch.
Back2Basics: Lindsey O Graham Sanctioning Russia and Iran Act of 2026
- Tariff ceiling: The Act allows US tariffs of up to 100% on the top buyers of Russian energy, chiefly China and India.
- Named sponsor: The Act is named after the late US senator Lindsey Graham, who sponsored the bill.
Matching Previous Year Question
“[2025, GS2, 15 marks] “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?”
