By Matt Underwood India Will Buy Russian Oil Despite Trump’s Threats, Officials Say, and honestly, it shouldn’t be a shock to anyone with a grasp of global economics. The simple fact is, a dollar bill, or in this case a barrel of oil, doesn’t just sit around gathering dust. The underlying reality of the situation is that India is able to secure much needed oil at a lower market price, which essentially removes some demand from the overall global supply of oil.
The narrative around Russian oil has been pretty consistent. It’s always been available for sale, though sometimes at a lower price point. Threats haven’t worked in the past, and it doesn’t seem like they will now. India has faced severe sanctions in the past, including nuclear tests, and has not wavered. The oil itself is not subject to sanctions.
Focusing on the specifics, the reality is that neither the US nor the EU has sanctioned Russian oil. India’s state-owned oil companies (OMCs) haven’t even touched Iranian or Venezuelan crude, which the US has indeed sanctioned. Moreover, these OMCs have consistently stuck to the $60 price cap for Russian oil, as recommended by the US. The EU has recently suggested a further price cap of $47.6 per barrel, which, according to Indian sources, will be enforced from September.
Therefore, India is, by all accounts, operating within the rules and regulations set by the international community.
Considering India imports around 85% of its oil, it’s really just doing what it needs to do while staying within the boundaries of international law.
It’s important to note that India isn’t even the biggest consumer of Russian energy. The EU was the largest importer of Russian liquefied natural gas (LNG), buying 51% of Russia’s exports, followed by China at 21% and Japan at 18%. Similarly, for pipeline gas, the EU remained the top buyer with a 37% share, followed by China (30%) and Turkey (27%).
Ultimately, the fact that India is buying Russian oil is not necessarily a primary concern for the US. India is primarily focused on refining and selling this oil, and they aren’t exactly worried if American consumers are paying more for goods. What, realistically, can the US even do? Sanctions haven’t proven effective in the past. Besides, before dictating energy purchases, the US needs to look in the mirror and stop buying Russian energy, and then flip it to Europe. India has over a billion people, and they have major energy needs. What else can the West expect them to do?
Furthermore, the relationship between India and Russia is strong, with ties dating back to the 1970s when the US imposed an embargo on India and Pakistan during the Bangladesh war. Many Americans and Europeans ask, “Why should India care about Ukraine when your countries don’t care about terrorist attacks on Indian soil?” It seems the US has a certain level of hypocrisy. Why impose sanctions on India when they are not necessarily doing anything that is illegal? Buying Russian oil actually benefits all countries because it keeps the demand down. The US is about money, and the days of US dominance are fading.
The notion of neo-colonialism simply won’t work on the global south. It’s interesting to see individuals holding both anti-Russian and pro-Russian viewpoints simultaneously. This dynamic provides Russia with significant financial resources to fund their war effort. India could consider a ban on food exports, but that could cause massive inflation worldwide. Perhaps OPEC+ could increase production to make Russian prices less appealing. It’s all a matter of money and playing the global game of supply and demand.
Looking at the EU, they are still heavily reliant on Russian energy. Here are some key statistics for the first quarter of 2023: Russia accounted for 14% of the EU’s total gas imports (9.7 bcm), 12% of the EU’s pipeline gas imports (4.6 bcm), and 16% of the EU’s LNG imports (5.1 bcm).
India is not the biggest offender here. Why should India stop buying Russian oil? Why should India care about what Russia does with the money it gets from the sale? If an employee uses their salary to buy drugs, is the employer to blame? India is not the only country at the table and is an economic powerhouse.
If anything, it’s within India’s strategic interests for Ukraine to get conquered, and for Ukrainians to get slaughtered. Just place a tariff on countries based on their percentage of Russian imports and use the tariffed money to fund Ukraine. This makes countries importing Russian products less competitive than those that do not.
It does not stop the situation but still continues trade with Russia to support the destruction of their own troops. India is always looking for a deal. If anything, people care more about their own people than the issues elsewhere. India used 35-40% Russian oil last year, and without that, it would be tough. Are they forced to sell under the cost of production to keep the oil from freezing in their pipes?