Arm Twisting

Markets are adept at sniffing out power plays disguised as policy. Reliance Industries’ wobble this week, nearly 4 percent off its value which dragged the Nifty with I —was officially attributed to profit-taking, crude-sourcing jitters and global uncertainty. Beneath the market jargon lays a more corrosive force of American high-handedness with US President Donald Trump once again using oil as a cudgel and India as a convenient pressure point.

Reliance makes for a revealing case study. The company had touched a 52-week high, inviting routine profit-booking. Yet the sharper edge of investor anxiety came from confusion over Russian crude. A report claiming tankers were headed to Jamnagar was swiftly denied by the firm. Reliance clarified that it had not received Russian oil for weeks and did not expect any in January. For investors, the subtext is that discounted Russian crude had bolstered refining margins and its absence could squeeze them.

This, buying cheap oil is no longer merely a business decision but a diplomatic act scrutinised and punished by Washington. Trump had earlier imposed a 25 percent ‘secondary’ tariff on Indian goods, explicitly citing New Delhi’s continued imports of Russian crude sending out a blunt message that if anyone trades with whom America disapproves of, they will have to pay a heavy price regardless of domestic law, economic logic or strategic autonomy.

Trump has further warned that tariffs could be raised further if India does not fall into line.

America insists these measures are about starving Russia of revenue amid the war in Ukraine. Yet the record is riddled with convenient inconsistencies. When global oil prices threaten American inflation, Russian barrels find their way into markets through tolerable intermediaries. When others - India chief among them - secure visible benefits from discounted crude, principle hardens into punishment.

India imports more than four-fifths of its crude. Every dollar shaved off the import bill eases inflation, steadies the rupee and cushions consumers. Russian oil offers such relief. Reliance had even reduced its purchases after Washington sanctioned Lukoil and Rosneft in late November.

By turning oil flows into ‘loyalty’ tests, America is corroding the very rules-based order it claims to uphold. Secondary sanctions and punitive tariffs extend American jurisdiction far beyond its borders, weaponizing the dollar and the market access it controls. The longer-term consequence of Trump’s adversarial tactics will lead to fragmentation in form of parallel supply chains, alternative payment systems and a growing determination among middle powers to hedge against American caprice.

While Reliance’s share-price dip will pass, the larger damage is subtler. Each episode of arm-twisting reinforces the lesson that partnership with America comes with conditions unilaterally set and casually enforced.

A country that champions free markets now polices them with tariffs and threats. Trump and his advisers ought to realize that while high-handedness may temporarily intimidate investors, it accelerates the search for a world in which Washington’s hand is easier to shrug off.