India’s decision to continue purchasing Russian crude oil amidst the global market turmoil and sanctions has been a topic of much debate. However, Union Petroleum and Natural Gas Minister Hardeep Singh Puri recently highlighted how India’s approach in buying Russian oil not only benefited the country but also played a critical role in stabilizing global energy prices.
In his statements, Puri asserted that India did the world a favor by securing Russian oil at affordable rates. This averted a potential price surge that could have sent global crude prices soaring to $200 per barrel.
Stabilizing the Global Market
According to Puri, the global energy market faced significant instability following Russia’s invasion of Ukraine in 2022, leading to a sharp drop in Russian oil supplies. As a result, Western nations imposed sanctions, including a price cap on Russian oil, which aimed to limit Moscow’s oil revenues.
However, the loss of Russian oil from the global market posed a risk of driving prices up sharply. If countries like India had chosen to shift their oil imports to other suppliers in the Gulf, Puri believes that global oil prices could have spiked as high as $200 per barrel.
In an interview with CNN, Puri explained that on February 22, 2022, there were 13 million barrels of Russian oil available in the market. Had India decided to stop purchasing Russian oil and shift its 5 million barrels to other suppliers, it could have triggered an unprecedented price surge, which would have impacted fuel affordability worldwide.
Instead, India’s decision to continue purchasing Russian oil under the price cap mechanism helped keep oil prices under control.
“We did everybody a favor by buying Russian oil,” Puri said, adding, “Let us not forget that while some ill-informed commentators talked about putting restrictions on India, many other European and Asian nations bought much more crude oil, diesel, LNG, and rare earth minerals worth billions of dollars from Russia.”
A Lesson in Strategic Energy Procurement
India’s oil imports from Russia have soared since the beginning of the Ukraine conflict. By June 2024, India’s crude oil imports from Russia had reached 1.97 million barrels per day (mbpd), the highest since July 2023. This increase was largely due to reduced demand from China, allowing India to secure favorable terms.
At the same time, the oil imported from Russia has been subject to the price cap imposed by Western nations. While some have criticized India for maintaining trade relations with Russia, Puri emphasizes that the decision was driven purely by market dynamics.
Russia’s oil, priced below market value due to sanctions, provided India with an opportunity to secure affordable energy for its growing population.
On the social media platform, X (formerly Twitter), Puri stated: “India did the entire world a favor by buying Russian oil because if we had not done so, the global oil prices would have skyrocketed to $200/barrel. Russian oil was never under any sanctions and there was only a price cap, which Indian entities also followed.”
Energy Security and Affordability for India
India, with its vast population of over 1.4 billion people, faces unique challenges in securing energy supplies. The country is highly dependent on oil imports, and any disruption to global oil markets can have significant repercussions on its economy and energy security.
Puri emphasized that India’s top priority is ensuring the steady availability, affordability, and sustainability of energy for its citizens. With over 70 crore (700 million) people visiting petrol pumps daily, any sudden rise in fuel prices would have a profound effect on the Indian economy and the lives of its citizens.
Despite the turbulent global oil market, Puri highlighted that India has been able to keep fuel prices lower compared to many other nations. In fact, fuel prices in India have come down significantly in the past three years, even as global oil prices surged. This achievement, Puri argued, underscores the importance of India’s pragmatic energy strategy, which focuses on securing the best possible deals for its oil companies and ensuring that consumers are shielded from unnecessary price hikes.
The Global Oil Landscape
In an interview with Bloomberg, Puri also discussed the role of OPEC+ in the global oil market, noting that oil decisions are ultimately made in the marketplace. OPEC+ is a group of international alliance of crude oil exporters which meet regularly to decide how much crude oil to sell on the world market.
He explained that OPEC+ members, who control a significant portion of the world’s oil supply, are free to manage their assets as they see fit. However, Puri emphasized that the availability of oil is not a global crisis—there is enough oil in the world to meet global demand. The challenge lies in ensuring that oil is distributed in a way that maintains price stability and guarantees access to affordable energy.
“The world does not face an oil shortage,” Puri stated. “It’s all about managing the supply and demand equation. There is enough oil in the world. OPEC+ decisions are part of the larger marketplace dynamics. If you choose not to utilize your asset today, there will be a time when it won’t be needed anymore.”
In line with this, India’s energy imports have diversified. While it imports about $20 billion worth of oil from the US annually, it has increasingly turned to Russia for cost-effective crude. This move has helped India balance its energy portfolio and shield itself from price volatility caused by geopolitical tensions or supply disruptions.
India’s Growing Bilateral Trade with Russia
India’s engagement with Russia is not limited to oil imports. In FY 2023-24, bilateral trade between the two countries reached an all-time high of $65.70 billion, with India importing a range of commodities, including oil, fertilizers, and mineral resources.
India’s exports to Russia also include pharmaceuticals, chemicals, and iron and steel products. This trade partnership has been crucial for India, allowing the country to secure essential energy supplies at competitive prices, while also expanding its trade footprint in Russia.
Bilateral investments between India and Russia have remained strong, with a revised target of $50 billion in investments by 2025. This growing economic cooperation reflects India’s broader strategy to maintain diversified energy sources and strengthen its geopolitical ties with key partners like Russia.
Manbilas Singh is a talented writer and journalist who focuses on the finer details in every story and values integrity above everything. A self-proclaimed sleuth, he strives to expose the fine print behind seemingly mundane activities and aims to uncover the truth that is hidden from the general public. In his time away from work, he is a music aficionado and a nerd who revels in video & board games, books and Formula 1.
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