India’s imports of Russian oil skyrocketed tenfold in the past year, resulting in significant cost savings for Asia’s third-largest economy, according to Bank of Baroda, a state-controlled lender in India. Amidst Western countries cutting their energy imports from Russia following its invasion of Ukraine, India has ramped up its crude purchases from Moscow, leading to savings of approximately $5 billion. As the world’s third-largest oil importer, India has taken advantage of Russia’s discounted energy prices, bucking the trend of Western countries.
Bank of Baroda’s data reveals that Russian oil accounted for a mere 2% of India’s annual crude imports in 2021. However, that figure has now surged to nearly 20%, highlighting the growing reliance on Russian oil. India’s oil imports from Russia during the previous financial year saved the country around $89 per tonne of crude.
Despite pressure from the US and Europe to adhere to sanctions on Russian imports, India has maintained its stance, refraining from explicitly condemning Russia’s actions in Ukraine. New Delhi has justified its oil purchases by emphasizing its dependence on energy imports and the need to prioritize affordable prices, particularly given the large population living in poverty.
While Europe, facing the same conflict, has imported six times more energy from Russia than India, the country’s External Affairs Minister, S. Jaishankar, highlighted in a TV interview that Europe had managed to reduce its imports comfortably. He questioned why Europe had not taken immediate action if it were a matter of principle.
With the Ukraine conflict ongoing, analysts anticipate that Russia will continue to offer cheap oil to major energy importers in Asia, particularly India and China. Vandana Hari, from energy analysis firm Vanda Insights, predicts that Russian crude intake will remain limited to these two countries, enabling them to benefit from the substantial discounts. However, if sanctions were to be lifted, India’s oil refiners would revert to their regular crude sources to maximize profit margins.
As the Ukraine conflict persists and global energy dynamics continue to shift, India’s strategic decision to increase oil imports from Russia serves as a testament to its economic priorities and its reliance on affordable energy sources. The country’s stance highlights the complex geopolitical considerations involved in energy trade and the challenges faced by Western countries in decoupling from Russian oil supplies.