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  • 📰India Buys Even More Russian Oil | Daily India Briefing

📰India Buys Even More Russian Oil | Daily India Briefing

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Canada and India to restore diplomatic ties. Risk premiums on investment-grade corporate bonds tighten to their lowest since 2007. India is set to increase its Russian oil imports in September.

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1. Canada, India Restore Ties as Both Brace for US Tariff Shock

Canada and India are moving to normalize relations, appointing new envoys after nearly a year of frozen diplomacy, just as both countries face escalating trade pressure from Washington.

Ottawa named Christopher Cooter, a veteran diplomat with 35 years’ experience, as its new high commissioner in New Delhi, while India tapped Dinesh Patnaik, currently ambassador to Spain, as its envoy to Ottawa. The announcements follow an agreement reached between Canadian Prime Minister Mark Carney and India’s Narendra Modi at the G-7 summit in June, signaling a desire to reset ties after a bruising diplomatic row.

The rapprochement comes at a critical moment. President Donald Trump has slapped a 50 percent tariff on Indian exports to the US, punishing New Delhi for continuing to buy Russian oil, while also raising tariffs on certain Canadian goods to 35 percent earlier this month. The tariffs are prompting both countries to strengthen trade diversification efforts, with Ottawa leaning more heavily on India as a partner, and New Delhi signaling that cooperation with Canada could help soften the blow from Washington’s measures.

“Restoring top-level diplomatic engagement is about more than symbolism; it’s about protecting economic interests,” Foreign Minister Anita Anand said. For Carney, the move underscores a pragmatic pivot: as US tariffs reshape global supply chains, Canada and India are working to turn strained relations into a shared front against trade disruption.

2. Bond Market Rally Leaves Investors Exposed to Thin Safety Margins

Global credit markets are flashing signs of exuberance as investors crowd into corporate debt, leaving only the thinnest of cushions against potential shocks.

Risk premiums on investment-grade corporate bonds have tightened to just 81 basis points, their lowest since 2007, compared with an average of 116 over the past five years. Even riskier securities, including subordinated bank bonds, are trading near record valuations, with some issues yielding less than comparable US Treasuries.

The rally is being fueled by a surge of demand from pensions, insurers and yield-hungry funds drawn to outright borrowing costs that remain historically high despite central banks cutting rates. “There’s so much capital chasing financial assets,” said Robert Cohen, head of developed credit at DoubleLine Capital. “The bargains get swept up pretty quickly.”

Emerging-market borrowers have also benefited, with dollar spreads dropping below 260 basis points for the first time in over a decade. In Asia, investment-grade dollar spreads have shrunk to record lows of 60 basis points, less than half their 10-year average.

Yet the hunt for yield is raising alarms. “When markets stop distinguishing between creditworthy borrowers and problem cases, liquidity, not fundamentals, is driving valuations,” said Guillermo Osses of Man Group.

Analysts warn the setup is fragile. If US growth slows as recent jobs and services data suggest, spreads could widen back toward 130–140 basis points. For now, though, fear of missing out is keeping investors all in.

3. India Set to Import More Russian Oil

Dock with West Bollsta semi-submersible drilling rig (a vessel in the Oil service segment) on the Tenerife island during sunset. P.S. If you like my work and want to support me, there is an option to buy a coffee (paypal link in profile). Thank you!

Defying U.S. interests, India is set to increase Russian oil imports in September, as per Reuters’ exclusive reporting.

The move comes after the United States’ 50 percent tariff on Indian imports will result in India’s multibillion-dollar gains from discounted Russian evaporating.

Since 2022, India has saved an estimated $17 billion (₹1.5 trillion) by dramatically boosting imports of Russian crude, which now make up nearly 40 percent of its oil purchases. But new 50 percent US levies could slash Indian exports by more than $37 billion (₹3.2 trillion) this fiscal year, according to the Global Trade Research Initiative.

The tariffs, targeting sectors from textiles to gems, threaten hundreds of thousands of jobs and land a political blow to Prime Minister Narendra Modi ahead of elections in Bihar. Analysts warn the squeeze could also reset India’s strategic calculus: Moscow remains essential for defense and energy, yet the US is still New Delhi’s most important partner in countering China.

India has pushed back, accusing Washington of “double standards” for penalizing its oil trade while continuing to import Russian uranium and metals. China also far surpasses India in Russian oil imports, yet faces a lower tariff rate. Officials insist halting Russian crude, around 2 million barrels a day, would disrupt supply chains and send fuel prices soaring, with internal estimates warning global crude could spike toward $200 (₹17,515) a barrel.

See you tomorrow.

Written by Eshaan Chanda & Yash Tibrewal. Edited by Shreyas Sinha.

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