Russian Oil Benefits India

Russian Oil Benefits India

 The United States has objected to Russia’s sale of crude oil to India and has warned of imposing penalties on it. While Western nations have been imposing sanctions, Russia has offered India discounted oil prices. As a result, India has saved billions of dollars in the past four years. European countries, which have been pressuring other nations, did not stop their own purchases of Russian natural gas during this period. Pointing out this contradiction, India has continued to buy oil from Russia.

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Last week, U.S. President Donald Trump imposed a 25% import duty on India. At the same time, he warned that if India continued purchasing crude oil and weapons from Russia, additional penalties would be imposed. Trump alleged that while efforts were being made to stop Russia from taking Ukrainian lives, oil and weapons were still being bought from it. After Western countries imposed sanctions, Russia has been selling crude oil to India and China. The share of Russian oil in India’s crude imports has increased from 2% to 35%.

Imports Rose After the Ukraine War

• Traditionally, India imports most of its crude oil from West Asian nations, especially Saudi Arabia and Iraq. However, since the Ukraine war began, this pattern has changed, with Russia becoming India’s largest supplier of crude oil.
• India ranks third among crude oil-importing countries, after China and the United States.
• Following the start of the Ukraine war, the U.S. and European countries imposed sanctions on Russia. As a result, Russia began supplying oil at discounted prices, which has benefited India. 

Rise of Russian Oil Import : From 2% To 35%  

Billions Saved for India

After the Ukraine war began, Western nations imposed economic sanctions on Russia. In December 2022, the G7, European Union, and Australia imposed restrictions on Russian crude oil transactions, setting a price cap of $60 per barrel. Consequently, Russia began selling oil to countries such as India and China, offering deep discounts compared to international market prices. Even when global crude oil prices were at their peak, Russia offered discounts of around $40 per barrel, and this trend has continued. In January 2023, Russian oil was $5 per barrel cheaper than Iraqi oil. Statistics indicate that India saved $13 billion over two financial years through these purchases.

Import Volumes at Discounted Prices

• In January 2022, India imported 68,000 barrels per day (bpd) of crude oil from Russia, while purchases from Iraq and Saudi Arabia stood at 1.23 million bpd and 883,000 bpd respectively.
• Within six months, by June 2022, Russia had overtaken both countries. India was importing 1.12 million bpd from Russia, compared to 993,000 bpd from Iraq and 695,000 bpd from Saudi Arabia.
• In May 2023, imports from Russia peaked at 2.15 million bpd.
• Since the Ukraine war, India has consistently imported around 1.4 million bpd from Russia, depending on discounts offered.
• Currently, imports stand at 1.78 million bpd from Russia, 900,000 bpd from Iraq, and 702,000 bpd from Saudi Arabia.

Impact of Import Duties

President Donald Trump has warned that if India does not stop importing crude oil from Russia, it will face consequences. The European Union has banned the purchase of petroleum products refined from Russian crude oil, which is likely to hurt Indian refineries. If Trump imposes additional import duties, India could face annual losses of $9–11 billion, experts say.

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Defence Deals Also in Focus

• Alongside crude oil imports, discussions are also ongoing regarding India’s arms purchases from Russia.
• Russia has historically been India’s largest arms supplier. From 2010 to 2014, 72% of India’s arms imports came from Russia; from 2015–19, this dropped to 55%, and it currently stands at 36%.
• The Indian government has adopted a policy of becoming self-reliant in defence rather than depending heavily on foreign suppliers. In addition, arms purchases from France, Israel, and the U.S. have increased, reducing the share of Russian arms imports.
• In global arms trade, the U.S. is the largest exporter, accounting for 43% of exports between 2020 and 2024.
• Russia ranks second, but its share has dropped to 7.8% from 21% in 2015–19.

• India is the second-largest arms importer in the world, accounting for 8.3% of global arms imports. However, its imports have decreased by 9.3% in 2020–24 compared to the 2015–19 period.