Desk REport,
How India became a major buyer of Russian oil
When President Donald Trump this week accused India of buying large quantities of oil from Russia and threatened to impose a “punitive” tax on top of the existing 25 percent tariff, it came as a shock.
How India became a major buyer of Russian oil
India’s active and visible presence in buying Russian energy has been notable since the invasion of Ukraine. At the time, most Western countries had reduced or stopped buying oil from Moscow altogether.
The US and European-led effort to pressure the Russian economy and punish Russian President Vladimir Putin sent global oil prices plummeting. India seized the opportunity to buy oil at a discount.
Although Trump has been angry about various aspects of India’s trade policy, he has never previously complained about buying oil from Russia. India believed that if Trump were re-elected, he would provide some relief from pressure from Joe Biden and the West to take a stand against Russia.
India and Russia have a long-standing trade relationship. Among them, energy trade occupies an easy place. Russia has a huge energy reserve. And India depends on the country for its imports. Russian oil became important for India immediately after the invasion of Ukraine in February 2022. At the beginning of that year, Russia’s share in India’s crude oil imports was only 0.2 percent. But after Russia’s European market was closed, Moscow’s oil exports to India by sea began to increase rapidly. By May 2023, Russia was supplying India with 2 million barrels of oil per day. This is about 45 percent of India’s total imports; the second highest after China. India has been buying oil from Russia regularly for two years. Despite price fluctuations, the total amount of oil India buys each year is about $ 275 billion (27 thousand 500 crores). As a result, Iraq and Saudi Arabia, which were previously India’s main suppliers of energy, have fallen far behind.
This India-Russia trade has been profitable for both sides. Although Russia is supposed to comply with the European Union’s $60-a-barrel price limit, the country has been able to sell oil at a discount. And India has bought oil at that discount. The country’s oil companies have refined some for their own use, and the rest has been exported as diesel and other products. Some of it has also gone to Europe.
The low cost of importing foreign energy products has been good for the Indian economy, supporting the value of the rupee. Mukesh Ambani’s Reliance Group has the world’s largest oil refinery on India’s west coast. The group has made significant profits in this oil trade. Reliance’s share price has risen 34 percent since the start of the Ukraine war. However, there has been no major change in the shares of the US company Exxon Mobil.
