Oil Prices Hit 4-Month High on Iran Tensions & US Supply Squeeze

...aaaand it's gone!

Tech's wreck at the open started it... following Goldman's Privorotsky's warning earlier to 'keep an eye on the megacap tech names today'...

US equities puked as the cash market opened, with Nasdaq erasing overnight gains rapidly...

...as losses in MSFT accelerated...

...crypto followed with Bitcoin crashing to its lowest since Dec 18th...

...and then gold plunged back below $5300...

And for now we see no catalyst for this break.

Source: Zero Hedge

India's economy is on track to grow between 6.8% and 7.2% in the fiscal year beginning in April, propelled by strong domestic demand even as global volatility presents significant headwinds.

The projection, detailed in the government's annual economic survey, marks a slight moderation from the current fiscal year's estimated 7.4% growth. Presented to parliament by Finance Minister Nirmala Sitharaman, the report strikes a tone of cautious optimism, forecasting "steady growth amid global uncertainty."

The government's assessment for the current year at 7.4% notably surpasses the 6.3%-6.8% range predicted in last year’s survey.

Navigating External Economic Pressures

While the domestic outlook is robust, the report acknowledges that global conditions introduce considerable uncertainty. Key external risks threatening India's economy include:

• Slower growth among major trading partners.

• Trade disruptions stemming from international tariff policies.

• Volatility in capital flows that could affect exports and investor sentiment.

The report, authored by Chief Economic Adviser V. Anantha Nageswaran and his team, positions these challenges as sources of uncertainty rather than immediate macroeconomic distress.

US Tariffs and the Undervalued Rupee

The survey directly addresses the impact of global trade tensions, particularly with the United States. In August, President Donald Trump imposed a 50% tariff on certain Indian goods, prompting New Delhi to accelerate efforts to diversify its export markets through new trade deals with the European Union, New Zealand, and Oman.

Since the tariffs were introduced, the Indian rupee has fallen 5%, hitting a record low of 91.9850 per dollar on Thursday.

The economic survey argues that the currency is now "punching below its weight." The report states that the rupee's valuation does not align with India's strong economic fundamentals. However, this "undervalued" status provides a partial buffer against the impact of higher U.S. tariffs on Indian exports.

This currency weakness comes with a trade-off. While beneficial for exporters and manageable during a period of low inflation, it has made foreign investors hesitant. This reluctance led to a record withdrawal of $19 billion from Indian equities in 2025, with foreign investors continuing to be net sellers in January.

Domestic Reforms to Drive a Resilient Economy

To counter external pressures, the government is relying on a series of domestic reforms to stimulate investment and consumption. The survey highlights recent policy changes expected to strengthen the economy, including consumption-tax cuts, a comprehensive overhaul of labor laws, and measures to open up the nuclear power sector.

Furthermore, the report expresses optimism that "ongoing trade negotiations with the United States are expected to conclude during the year," which could help reduce uncertainty on the external front.

International Consensus on India's Growth Story

The Indian government's growth forecast is broadly in line with projections from major international institutions.

The International Monetary Fund (IMF) recently raised its growth forecast for India for the upcoming fiscal year to 7.3%. Similarly, the World Bank upgraded its projection to 7.2%.

Domestically, the Reserve Bank of India (RBI) has noted that high-frequency indicators point to sustained demand. The central bank has actively supported growth by cutting interest rates by 125 basis points since February 2025, its most aggressive easing cycle since 2019.

Source: decrypt

India's top private refiner, Reliance Industries, is set to drastically reduce its intake of Russian crude oil. Starting in February, the company plans to import approximately 150,000 barrels per day (bpd) of non-sanctioned crude, a significant cut driven by compliance with U.S. sanctions.

This move marks a major policy shift for the company, led by billionaire Mukesh Ambani. Previously, Reliance was a primary customer for Russian crude, importing over 500,000 bpd through a long-term agreement with Rosneft.

Following U.S. sanctions targeting Russian energy giants like Rosneft and Lukoil, Reliance completely stopped its purchases from Rosneft and began sourcing crude from non-Russian suppliers.

Navigating US Trade Tariffs

The decision to limit Russian oil imports aligns with India's broader strategy to navigate difficult trade negotiations with the United States. The Trump administration has specifically targeted India for its significant purchases of Russian crude, which are seen as supporting Moscow's energy revenues.

In response, President Donald Trump doubled a tariff on India from 25% to 50%, effective August 2025, as a punitive measure. Consequently, Reliance's import volume is dropping from over 550,000 bpd just months ago to the new, limited level of 150,000 bpd.

Adjusting Operations for EU Rules

European Union regulations are also shaping Reliance's operational strategy. The EU recently implemented a ban, effective January 21, on importing petroleum products made from Russian-origin crude, even if they are processed in a third country.

To comply with this rule, Reliance will now process its limited Russian crude imports exclusively at its Jamnagar refinery unit that serves the domestic Indian market. As a proactive measure, the company had already ceased processing Russian crude at its export-oriented refinery units in November to ensure full compliance with the impending ban.

While America's military and technological dominance remains unchallenged, a subtle but significant shift is reshaping the global trade landscape. Prompted by President Donald Trump's affinity for tariffs, U.S. allies are discovering they have more options than previously thought in the trade of goods, and they are adapting with surprising speed.

This isn't a dramatic decoupling. No one is seriously attempting to abandon the U.S., which is still the world's most lucrative market. Instead, a recent wave of bilateral pacts signals a more measured strategy: "de-risking." This term, once primarily used in discussions about China, now applies to hedging against unpredictability from Washington.

Pursuing this strategy comes with costs, from reconfiguring supply chains to forging alliances with nations that don't share identical values. However, early indicators suggest the economic price of this insurance policy is manageable.

The New "De-Risking" Playbook

"Trade is probably one of the areas where middle powers have some of the greatest agency in choices," notes Alexander George, senior director for geopolitics at the Tony Blair Institute for Global Change (TBI).

He points to the European Union as a prime example. The threat of U.S. trade actions appeared to galvanize the bloc, leading to the recent signing of the long-stalled EU-Mercosur trade deal with Latin American countries and a new agreement with India.

Of course, these deals face political and legal hurdles. The EU's ability to ratify the Mercosur pact will be a key test of its resolve. Similarly, recent efforts by British and Canadian leaders to mend ties with China are in their early stages, though some initial deals have already been made.

How Businesses Are Reshaping Supply Chains

Businesses aren't waiting for governments to draw a complete map of the new trade order. The Irish Whiskey Association, for example, celebrated the EU-India deal as a "critical" move to find new customers and offset the impact of a 15% U.S. tariff on its largest market.

Figure 1: G7 trade flows with the United States show a clear divergence in 2026, with countries like Canada and Germany seeing significant declines while Italy and the UK increased their trade, illustrating the complex realignment of global commerce.

Meanwhile, German corporate investment in China reached a four-year high last year. According to the IW German Economic Institute, this was partly driven by a need to build local supply chains in response to a more challenging U.S. trade environment.

Despite the turbulence, the global economy has remained resilient. A quarterly Reuters poll of 220 economists showed that the forecast for global economic growth this year remains at 3%, unchanged from a year ago, even with supply chain adjustments underway.

Some experts see long-term benefits in this restructuring. World Trade Organization Director-General Ngozi Okonjo-Iweala told Reuters that diversifying investment and production builds global resilience and creates jobs. This aligns with Canadian Prime Minister Mark Carney's call for "middle powers" to build a network of alliances among themselves.

The Cost of Confrontation

For most nations, diversification is a safer bet than direct confrontation with the United States.

Modeling from the UK's Aston University found that if tensions over Greenland had escalated, a threatened 25% U.S. tariff would have cost European economies only 0.26% of per capita income if they chose not to retaliate. In contrast, a retaliatory 25% levy on U.S. goods would have more than doubled that cost.

Mujtaba Rahman, managing director for Europe at Eurasia Group, notes that forging new trade alliances abroad can be politically easier for governments than implementing difficult domestic economic reforms. "Diversification on the trade side is absolutely happening and continuing," he said of Europe.

Limits to the Global Trade Realignment

Two key factors could limit the pace and scope of this global adaptation.

First, China's reluctance to stimulate domestic consumer demand means it cannot easily absorb the slack from the U.S. market. The Tony Blair Institute observed that while China's exports have grown since the implementation of higher U.S. tariffs, its imports have stayed flat, forcing other nations to accept widening trade deficits with Beijing.

Second, the United States may actively discourage countries from pursuing diversification strategies that pull them out of its economic orbit. "The question is to what extent this becomes a geopolitical faultline," said TBI's George, highlighting the risk of trade shifts escalating into broader strategic tensions.

Russian oil giant Lukoil has announced plans to sell its international assets to the U.S. private equity firm Carlyle Group. The move comes as the company races to divest its global portfolio ahead of a U.S. sanctions deadline.

While financial details of the proposed deal were not disclosed, Lukoil confirmed in a statement that the sale would not include its assets in Kazakhstan.

The Sanctions Deadline Driving the Sale

The sale is a direct response to sanctions imposed by U.S. President Donald Trump, aimed at pressuring Russia for a ceasefire in its war on Ukraine. The U.S. Treasury has given Lukoil until February 28 to sell its foreign holdings.

However, the transaction is not yet final. It still requires approval from the U.S. Office of Foreign Assets Control (OFAC), the agency responsible for administering sanctions. In the meantime, Lukoil stated it will continue negotiations with other prospective buyers.

Reactions from Carlyle and the Kremlin

Carlyle Group issued a statement highlighting its commitment to ensuring operational continuity and preserving jobs. The firm also acknowledged the "critical importance" of the assets to the energy security and infrastructure of the nations where they are located.

When questioned about the deal, the Kremlin stated it could not comment on corporate agreements. Kremlin spokesman Dmitry Peskov remarked, "For us, the most important thing is that the interests of the Russian company involved are protected and respected."

A Previous Bid and Political Pressure

This is not the first attempt to sell these assets. In October, the Swiss commodities trading firm Gunvor announced a proposal to buy Lukoil’s portfolio but later withdrew its offer.

The withdrawal followed accusations from the U.S. that Gunvor was "the Kremlin's puppet," a claim the Geneva-based company rejected. A November 6 post on X from the U.S. Treasury Department underscored the political climate, referencing President Trump's stance on the war and stating, "As long as Putin continues the senseless killings, the Kremlin's puppet, Gunvor, will never get a license to operate and profit."

Lukoil's Global Footprint Under Pressure

The sanctions put a significant portion of Lukoil's international business at risk. The company's global operations include:

• Stakes in oil and gas projects across 11 countries.

• Refineries located in Bulgaria and Romania.

• A 45% stake in a refinery in the Netherlands.

• Gas station networks in several countries.

The new sanctions, announced by Trump on October 22, target both Lukoil and Rosneft, Russia's two largest oil companies. Together, these firms account for approximately half of the country's oil exports, a major source of revenue for the Russian government.

The sanctions severely restrict their ability to conduct business outside of Russia by barring U.S. entities from dealing with them and threatening secondary sanctions against any foreign banks that handle their transactions.