India’s Foreign Minister stated that targeting the country is unfair. He promised that India will take all necessary measures to protect its national interests. The minister explained that India began buying from Russia after its usual suppliers redirected resources to Europe due to conflict. This change was initially supported by the US to stabilize global energy markets.

Energy Supply Strategy

India imports from Russia to ensure steady and affordable energy costs for its consumers. As of August 4, 2025, this declaration highlights a significant geopolitical risk we need to consider. The change in the US administration since January is crucial, as the earlier support for these energy imports has likely diminished. We are now monitoring for any signs that the US may take a more confrontational approach towards India’s trade with Russia. For crude oil traders, this creates a new uncertainty. India is a major oil consumer, importing about 1.5 million barrels per day from Russia as of late 2024. Any potential US sanctions could disrupt this supply, leading to market fluctuations. Therefore, we should consider purchasing long-dated call options on Brent crude to protect against possible supply shocks.

Impact on Indian Markets

In Indian markets, we should brace for increased volatility. Geopolitical tensions often lead to capital flight from emerging markets, putting pressure on stock prices. We might consider buying put options on the Nifty 50 index to safeguard against a potential market decline in the coming weeks. In this scenario, volatility becomes a tradable asset. Historically, the India VIX rises in response to geopolitical events, so we expect an increase in implied volatility overall. Traders can capitalize on this by purchasing calls on the India VIX, as option prices are likely to rise with escalating uncertainty. The currency market will also be significantly affected by this tension. A harder US stance could weaken the Indian Rupee, which has previously dipped below 83 to the dollar during global risk periods. We should explore USD/INR futures or options, specifically by buying call options on this pair to benefit from or protect against Rupee depreciation. Ultimately, we are navigating the uncertainty surrounding the US response. We recall the previous Trump administration’s aggressive trade policies used as foreign policy tools. Therefore, these derivative positions serve not just as a speculation, but as a necessary hedge against the real risk of significant developments. Create your live VT Markets account and start trading now.

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