India-US Tariff War / PM Modi's master stroke on buying oil from Russia, Trump is stunned!

India-US Tariff War: India's major oil companies, such as Indian Oil, Mangalore Refinery and Petrochemicals Limited, Hindustan Petroleum Corporation Limited, and Bharat Petroleum Corporation Limited, continue to import crude oil from Russia. According to news agency ANI, these companies rejected US President Donald Trump's claim that India has stopped buying oil from Russia. India has clearly demonstrated its independent energy policy on the global stage by continuing to import Russian oil.

Basis of buying oil from Russia

India's decision to buy Russian oil is based on price, quality of crude oil, stock availability, logistics, and other economic factors. Russia, the world's second-largest crude oil producer, produces about 9.5 million barrels of oil per day. Of this, 4.5 million barrels of crude oil and 2.3 million barrels of refined products are exported. In March 2022, Brent crude prices had reached $137 per barrel due to fear of Russian oil being out of the market. In such a situation, India strategically optimized its sources to ensure affordable and reliable energy supply, while also following international rules.

India's strategy and national interest

Former US President Donald Trump had claimed that India could stop buying Russian oil and called it a "good move". However, India retained the right to decide its energy policy independently, prioritizing its national interests. India not only ensured its energy security by continuing to import Russian oil, but also played an important role in stabilizing the global oil market.

According to reports, there was never a complete ban on Russian oil. Instead, the G7 and the EU implemented a price-cap mechanism, which aimed to limit Russia's revenue as well as maintain global supply. India played the role of a responsible global player by following this mechanism. If India had not imported subsidized Russian oil, especially when OPEC+ cut production by 5.86 million barrels per day, oil prices could have risen even beyond $137 per barrel in March 2022. This would have further increased inflationary pressure globally, which would have affected many countries including India.

Price cap and Indian companies' policy

There is no blanket ban on Russian oil by the US or the EU. Indian oil companies follow the price cap of $60 per barrel suggested by the US. Recently, the EU has proposed a new price cap of $47.6 per barrel for Russian crude oil, which will come into effect from September. Indian companies are not importing oil from countries like Iran or Venezuela, on which the US has actually imposed sanctions. On the contrary, imports from Russia are completely within the ambit of international rules.

Russia's oil and gas exports in the global context

Russian energy resources have an important place in the global market. The EU has been the largest buyer of Russian liquefied natural gas (LNG), purchasing 51% of Russia's LNG exports. It is followed by China (21%) and Japan (18%). In the case of pipeline gas too, the EU is the top buyer with a 37% share, while China (30%) and Turkey (27%) are the other major importers. This shows that global dependence on Russian energy resources continues, and India's Russian oil imports are part of this broader context.