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Prime ministers

India's Oil Trade with Russia: A Complex Relationship

Strategic Insights

— 2 min read

Indian Prime Minister Narendra Modi has been resisting pressure from the U.S. to halt imports of Russian oil, citing concerns about energy security and the potential impact on global energy markets. However, the relationship between India and Russia's oil trade has become increasingly complex, with various consequences for both countries and the global community.

Key Takeaways:

  • India has been one of the world's largest consumers of Russian oil, importing about 1.75 million barrels a day between January and June, at a discount offered by Moscow following Western sanctions.
  • The U.S. has imposed a 50-per-cent tariff on Indian goods for trading in sanctioned Russian oil, effective from August 27, accusing India of helping fund Vladimir Putin's invasion.
  • Russia has offered discounts to India and other partners to circumvent Western sanctions, but this has had environmental consequences and minimized the impact of the price cap on Russia's profits.
  • India has increased its resale of Russian oil and petroleum exports to sanction-adhering countries in the West, including the United States, and made significant profits from these exports.
  • The EU has imported 200-billion worth of pipeline gas directly from Russia over the course of the war, some of which was even transferred through Ukraine.
  • The EU has adopted a new road map for reducing Russian gas imports by 2027, but their latest sanctions package did not ban Russian gas and continued to provide exemptions on certain oil products.
  • Indian oil imports from Russia have been criticized for funding Vladimir Putin's invasion, with Ukrainian President Volodymyr Zelensky accusing India of helping to fund the war effort.

Statistics:

  • India has imported about 1.75 million barrels of Russian oil a day between January and June.
  • The U.S. has imposed a 50-per-cent tariff on Indian goods for trading in sanctioned Russian oil, effective from August 27.
  • India has exported $86.28-billion worth of refined petroleum goods to the EU, Britain, and the U.S. in 2023.
  • The EU has imported 200-billion worth of pipeline gas directly from Russia over the course of the war.
  • The price difference between Russia's discount and the market price has been as small as $1 to $2.
  • Over one-third of India's exports of oil products to sanction-adhering countries in the West, including the United States, was derived from Russian crude in the first year of the sanctions regime.

Sources:

  • BBC News: "India and Russia oil trade: The complex relationship"
  • The Washington Post: "U.S. imposes 50% tariffs on India for trading in sanctioned Russian oil"
  • Reuters: "India's oil exports to EU, Britain and US reach $86.28 billion in 2023"
  • The New York Times: "Ukraine's president accuses India of helping to fund the war effort"
  • Finland's Centre for Research on Energy and Clean Air: "Report on India's oil exports to the West"

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