'No backup from OPEC or shale': JP Morgan economist explains global risk if India quits Russian oil
India imports around 1.7 million barrels of Russian crude daily, and diverting that supply into the open market would trigger global shortages, says the economist
- Aug 27, 2025,
- Updated Aug 27, 2025 5:41 PM IST
Dr Sajjid Chinoy, Managing Director and Chief India Economist at JP Morgan, has warned that forcing India to exit Russian oil purchases would destabilise global energy markets, driving crude prices to $90 a barrel or higher without disturbing India's own economic fundamentals. "Buying Russian oil was not sanctioned. China buys much more oil than we do. The Europeans buy gas from Russia," Chinoy told India Today TV.
The economist explained that India imports around 1.7 million barrels of Russian crude daily, and diverting that supply into the open market would trigger global shortages.
"If India were to diversify away from Russian oil, it really won't affect India's macro fundamentals. Those discounts are down to a few dollars. India's got a low current account deficit, and inflation is low. It doesn't shake our macros. But think of the broader global impact. If that demand is suddenly transferred to the open market, other countries are going to struggle to meet that supply."
"Neither OPEC nor US shale has the capacity to ramp up 1.7 million barrels a day. So what's the impact of that going to be? Much higher global crude prices that could touch $90 a barrel or higher, which is a bad thing for the whole world," Chinoy said.
He described Washington's demand that India scale back Russian energy imports as "counterproductive and self-defeating." "It doesn't affect India's macro math, but it does push up global crude prices and hurt everybody in the bargain," he said.
The remarks come as an additional 25 per cent tariff on Indian goods kicked in, raising total import duties to 50 per cent on $48.2 billion worth of exports from August 27. The penalty, imposed over India's purchases of Russian crude oil and military equipment, targets labor-intensive sectors such as textiles, gems and jewellery, footwear, leather, chemicals, and machinery, while exempting pharmaceuticals, energy products, and electronics.
Chinoy acknowledged the tariff shock could dent competitiveness. "The starting point is that about 1% of India's GDP is exposed to tariffs in the US. A lot of this is in labor-intensive sectors, textiles, leather, gems and jewelry, footwear. At 50% we become much less competitive than our peers in the region, who face more like 20 or 25%. Then of course there'll be a knock-on impact on consumption and employment, and if this persists for a while, then of course the tertiary impact will be on investment and animal spirits," he said.
Chinoy also called for diversification of trade ties, stressing that the US accounts for just 15 per cent of global imports. “There is a trading world outside the US and India must seek to exploit that, diversify and deepen, and strengthen our trading relationships in tandem," he said, citing progress with the UK deal and the need to push for an EU pact, as well as considering regional arrangements like CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership).
He dismissed calls for retaliation. "We've got nothing to gain by retaliating. Remember, the focus has been on goods exports. India's service exports to the US are estimated at 6% of GDP, almost three times that of goods. We've got a lot of exposure to the US, and so there's nothing to gain from getting angry or retaliating. We need to be cool, calm, rational, calculated," he said.
Dr Sajjid Chinoy, Managing Director and Chief India Economist at JP Morgan, has warned that forcing India to exit Russian oil purchases would destabilise global energy markets, driving crude prices to $90 a barrel or higher without disturbing India's own economic fundamentals. "Buying Russian oil was not sanctioned. China buys much more oil than we do. The Europeans buy gas from Russia," Chinoy told India Today TV.
The economist explained that India imports around 1.7 million barrels of Russian crude daily, and diverting that supply into the open market would trigger global shortages.
"If India were to diversify away from Russian oil, it really won't affect India's macro fundamentals. Those discounts are down to a few dollars. India's got a low current account deficit, and inflation is low. It doesn't shake our macros. But think of the broader global impact. If that demand is suddenly transferred to the open market, other countries are going to struggle to meet that supply."
"Neither OPEC nor US shale has the capacity to ramp up 1.7 million barrels a day. So what's the impact of that going to be? Much higher global crude prices that could touch $90 a barrel or higher, which is a bad thing for the whole world," Chinoy said.
He described Washington's demand that India scale back Russian energy imports as "counterproductive and self-defeating." "It doesn't affect India's macro math, but it does push up global crude prices and hurt everybody in the bargain," he said.
The remarks come as an additional 25 per cent tariff on Indian goods kicked in, raising total import duties to 50 per cent on $48.2 billion worth of exports from August 27. The penalty, imposed over India's purchases of Russian crude oil and military equipment, targets labor-intensive sectors such as textiles, gems and jewellery, footwear, leather, chemicals, and machinery, while exempting pharmaceuticals, energy products, and electronics.
Chinoy acknowledged the tariff shock could dent competitiveness. "The starting point is that about 1% of India's GDP is exposed to tariffs in the US. A lot of this is in labor-intensive sectors, textiles, leather, gems and jewelry, footwear. At 50% we become much less competitive than our peers in the region, who face more like 20 or 25%. Then of course there'll be a knock-on impact on consumption and employment, and if this persists for a while, then of course the tertiary impact will be on investment and animal spirits," he said.
Chinoy also called for diversification of trade ties, stressing that the US accounts for just 15 per cent of global imports. “There is a trading world outside the US and India must seek to exploit that, diversify and deepen, and strengthen our trading relationships in tandem," he said, citing progress with the UK deal and the need to push for an EU pact, as well as considering regional arrangements like CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership).
He dismissed calls for retaliation. "We've got nothing to gain by retaliating. Remember, the focus has been on goods exports. India's service exports to the US are estimated at 6% of GDP, almost three times that of goods. We've got a lot of exposure to the US, and so there's nothing to gain from getting angry or retaliating. We need to be cool, calm, rational, calculated," he said.