World politics and business have become quite complex these days. On one hand there is the Russia-Ukraine war, on the other hand the sanctions of America and Europe, and on the third hand there is concern about energy security. In such an environment, India has made it clear that it will keep its interests above all else. According to the ET report, despite all the pressures, India can continue buying crude oil from Russia even in the year 2026. The reason for this is cheap oil and increasing energy needs of the country.
In the last few years, Russia has become one of the largest oil suppliers to India. After the Russia-Ukraine war, when Western countries imposed sanctions on Russia, Russia started selling its crude oil at a huge discount. India took advantage of this opportunity. This not only saved billions of dollars in India’s import bill, but also kept the prices of petrol and diesel under control to some extent.
America’s displeasure, but India stands firm
America has been continuously wanting India to distance itself from Russia. For this, there were many warnings, tariffs and restrictions. There was interruption in Russian supply for some time, but this effect did not last long. Market experts say that the supply of Russian oil has been more stable than expected and the possibility of a complete cut in it is very less.
Why can’t India give up Russian oil?
India is the third largest oil importer in the world. The country’s needs are continuously increasing, but domestic production is limited. In such a situation, the most important thing for India is reliable and affordable supply. Russian crude oil fits this criterion. When oil is expensive in the international market, discounted Russian barrels prove to be a profitable deal for Indian refineries.
Middle East returns
To balance American pressure, India has also increased oil purchases from the Middle East. Long term deals are being made with countries like Iraq, Oman and UAE. Government companies are also purchasing from the spot market. But this does not mean that Russia will be completely excluded. Experts believe that India will buy oil from many countries simultaneously, so that there is no dependence on any one.
Big companies will also continue purchasing
The country’s major refining companies Indian Oil, Bharat Petroleum and some private players are still buying oil from Russia. Even companies that had previously exercised caution are now sourcing non-restricted Russian cargo. The direct reason for this is better margins and stable supply. Energy market experts say that it is almost impossible to completely ban oil. Despite the restrictions, oil reaches the market through some means or the other. A big buyer like India has no dearth of options, but it does not seem practical to completely ignore Russia’s cheap oil.
Mathematics can change due to trade deal
The proposed trade deal between India and America may change the equation in the coming times. If there is any major agreement between the two countries, then India may have to rethink its strategy to some extent. However, at present no such deal has been finalized, and till then India will continue to take decisions according to its needs.
Refining capacity and growing needs
According to the government, India’s refining capacity is going to increase significantly by 2030. This will further increase the demand for oil. In view of this, India is now importing oil from more countries than before. While a few years ago there were about 27 sources of supply, now this number has increased to more than 40. At present there is sufficient supply of oil in the global market. India is benefiting from this. Even if discounts are not available everywhere, options are open. Experts believe that India can gradually make some changes in the purchase of Russian oil, but it is neither easy nor beneficial to stop it completely.
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