India has strategically positioned itself between Russia and the Western coalition backing Ukraine, taking advantage of the rewiring of the world’s economic relationships following the war. As the US, Europe, and other countries impose sanctions on Moscow, India has emerged as a major market for Russian oil. The country now purchases nearly two million barrels a day, accounting for 45% of its imports. This influx of cheap Russian oil has not only boosted India’s economy but also provided a lucrative opportunity for the country to refine the crude and export the products to regions that have banned direct oil purchases from Russia, such as the European Union.
Prime Minister Narendra Modi has maintained a neutral stance on the conflict in Ukraine, but India’s balancing act will come under scrutiny during his state visit to the United States. The leaders of both nations will discuss new partnerships in defense, clean energy, and space, aiming to strengthen what the Biden administration considers one of its most important relationships. These discussions are likely to address India’s ties to Russia and explore ways to reduce dependence on the country in defense and energy.
India’s shift towards purchasing Russian oil has been significant, with the country now buying about half of Russia’s seaborne oil exports. China is also a major buyer, leading to Moscow selling more crude than before the invasion of Ukraine. The lower prices have reduced Russian government revenue from oil trade, but India has managed to take advantage of the situation. Before the invasion, India primarily imported oil from the Middle East at fluctuating prices. However, shipments of cheaper Russian crude began pouring in after the conflict began. The average price per barrel dropped from $78 to $51 after the price cap was imposed, resulting in billions of dollars in savings for Indian buyers.
The bulk of Russian crude shipped to India arrives at ports near Jamnagar in Gujarat State, where it is then piped to nearby refineries. The Jamnagar Refinery, owned by Reliance Industries, is the largest in the world, capable of processing over 1.2 million barrels per day. Reliance is controlled by Mukesh Ambani, India’s most influential businessman and a strategic partner to Prime Minister Modi’s government. The second-largest refinery in India, owned by Nayara Energy, is just a short distance away and is 50% owned by Rosneft, Russia’s state oil company. As the trade in this region grows, Russian companies and Moscow are reaping the benefits.
India sells the refined products to various markets, including Southeast Asia, Africa, Europe, and the United States, earning revenue and bolstering its foreign currency reserves. A report by the Center for Research on Energy and Clean Air identified India as one of the key “laundromat” countries that buy Russian oil, refine it, and sell it to jurisdictions that have halted direct purchases from Russia. The port of Sikka, serving the Jamnagar Refinery, is the largest global import point for seaborne Russian crude oil and the main point of oil exports to countries observing the price cap.
India denies any intent to profit from wartime sanctions and instead prioritizes its own interests. The country aims to become more self-reliant and is determined to pursue its own agenda without concern for its partners’ complaints. India’s foreign minister, S. Jaishankar, defended the decision to buy Russian crude, stating that it is in the best interest of the Indian people to seek the best deals available. This approach aligns with India’s goal of prioritizing the Indian public and promoting self-interest.
In conclusion, India’s strategic positioning between Russia and the Western coalition has allowed it to benefit from the rewiring of global economic relationships. Purchasing cheap Russian oil has both boosted India’s economy and provided an opportunity to refine and export the products to regions that have imposed sanctions on Russia. While balancing its ties to Russia, India is actively pursuing partnerships with other nations, including the United States, to further its defense, clean energy, and space sectors.
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