Creating new perspectives since 2009

The future of Russian oil exports to India after the Russian invasion of Ukraine

April 16, 2022 at 11:46 am

A view from a Shell gas station in Moscow, Russia on 8 March 2022 [Pavel Pavlov/Anadolu Agency]

Russia’s invasion of Ukraine and subsequent sanctions against the Russian economy have made it more difficult for Russia to export energy. Upon Russia’s military advance on Ukraine, India was one of the few major powers to adopt a neutral approach and refrain from voting against Russia at the Security Council. Despite pressure from the US and the Western Front, India’s pro-Russian stance underscores the importance of re-examining Moscow’s position in Indian foreign policy. It should be noted that India supplies about two per cent of its oil needs through imports. India is the third-largest consumer of oil in the world. According to the International Energy Agency, India will be the largest consumer of energy globally for the next 20 years, which has made energy one of India’s top priorities in advancing its foreign policy. Any disruption to the country’s energy supply will negatively impact Delhi’s economy, development and domestic and foreign policy programmes.

The sanctions against the Russian invasion of Ukraine provided a good opportunity for major energy-consuming countries, such as India, to buy Russian oil at a lower price. There has been a slight increase in India’s imports from Russia since Russia started to invade Ukraine. According to industry observers, India seeks to import cheaper oil from Russia. Crude oil imports from Russia to India were not very frequent; throughout 2021, 12 million barrels of oil were imported. Since the start of March, five cargoes of Russian oil, equivalent to approximately six million barrels, have been arranged to be dispatched to India at the beginning of April.

Despite Russia’s small share of India’s energy security, US President Joe Biden’s government has called on India to reduce its oil purchases from Russia. The White House stated on 4 April that the amount of oil imported from Russia by India was only one to two per cent of its total imports: “Just to make it clear, India’s import of Russian energy represents only one to two per cent of total energy imports.” The US government insisted that India work with the US to decrease India’s imports from Russia. Last year, India imported primarily mineral oils, fertilisers and rough diamonds from Russia, valued at $6.9 billion, whereas India exported primarily pharmaceutical products, tea and coffee, valued at $3.33 billion. The drop in Russian oil prices has led some Indian refineries to import oil from Russia instead of Saudi Arabia. India bought 14 million barrels, equivalent to two million tonnes of Russian oil, from 24 February to early April, when Russia launched a military strike on Ukraine, up from about 16 million tonnes last year. Although the purchase of Russian oil is only a small part of India’s total oil imports, it is significant for Russia, which has lost European markets.

READ: Saudi, Kuwait call on Iran to join talks on Dorra gas field demarcation

In an authorised meeting with Indian Prime Minister Narendra Modi, Biden stressed the need to increase military cooperation between the two countries. But India has not said it will change its position on oil imports from Russia. Thus, Washington’s attempt to change New Delhi’s position on Russia’s ongoing war with Ukraine at the highest level has so far been unsuccessful. The meeting between Modi and Biden came as Indian Foreign and Defence Ministers Subramaniam Janishkar and Rajanat Singh arrived in Washington to meet with their US counterparts Antony Blinken and Lloyd Austin to attend a “2 + 2 ministerial dialogue”. The virtual meeting coincides with the 75th anniversary of diplomatic relations between the two countries, and according to the US State Department, its purpose is to: “Strengthen the importance of comprehensive and global strategic cooperation between the United States and India. The emphasis is on our shared commitment to the free, open and prosperous waters of the Indian and Pacific Oceans.”

In September of last year, India and Russia called for increased energy cooperation. Companies in Russia and India have been striving to go beyond their $32 billion investments in joint projects by cooperating in the oil and gas sector. Russian Energy Minister Nikolay Shulginov said that almost all major companies, such as Rosneft, Gazprom Neft and Novatek, were in pursuit of developing new projects with oil and gas companies in India.

READ: Saudi Arabia leads OPEC decision to drop IEA data as US ties fray

The Indian defence minister said the US knew that India and Russia were “commonwealth allies” and had “very stable” relations. In an exclusive interview with Hindustan Times, Indian Defence Minister Rajnat Singh confirmed that India and Russia were “commonwealth allies” but that this relationship will not negatively affect India’s cooperation with the US. India, meanwhile, is trying to maintain a balance in its relations with Russia and the US, despite the two countries’ dissatisfaction. For example, Indian purchases of arms from Russians in recent years have been made despite Washington’s opposition, and the US has been outraged by Moscow’s relative indifference to India’s use of these weapons.

India, which imports 85 per cent of its oil needs, bought 3.6 million tonnes of oil from Russia, which corresponds to two per cent of the 176 million tonnes imported between April 2021 and January 2022. India could easily find an alternative to Russian oil in its energy basket, but New Delhi is reluctant due to the new balance of power in the region. There will be tension between New Delhi and Moscow. Russia needs to sell oil and gas, and increasing oil and gas sales to India will increase trade. New Delhi may want to gradually reduce its oil purchases from Russia in order to maintain its relations with Europe and the US, but before making such a decision, it will buy most of its oil from Russia. Cheap Russian oil and the energy crisis are India’s best motivations to buy Russian oil.

The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.