India’s fuel oil imports from Russia fell by a record 55 percent in November this year. It reached its lowest level since June 2022, when the Ukraine war began.
According to a report by the research institute Center for Research on Energy and Clean Air (CREA), this record decrease has caused a major economic crisis in India.
According to the report, Russia is still India’s largest oil supplier. India was second in the list of Russian oil importers in November. China is in first place. China bought 47 percent of Russia’s crude oil exports in November, followed by India (37 percent), the European Union (6 percent) and Turkey (6 percent). After Russia, Iraq and Saudi Arabia are India’s main sources of fuel oil.
Earlier, India came under pressure from the United States and Canada over the killing of Sikh leader Hardeep Singh and multiple allegations of human rights violations. Canadian Prime Minister Justin Trudeau publicly alleged that Indian state agents were involved in the killing. Although the Modi government has dismissed the allegations as “false and baseless”, diplomatic tensions between Ottawa and New Delhi are escalating. Ottawa has already expelled an Indian diplomat, prompting India to retaliate.
The United States has also taken a tough stance on the issue, saying Washington will protect human rights and fundamental principles. And no country will be spared in the event of such violations.
US National Security Advisor Jake Sullivan said the US supports the Canadian investigation and urges India to take the matter seriously.
India’s hostility towards the US-Canada relationship has strained bilateral relations and put India in a diplomatic bind. The Sikh community in Canada is reacting strongly to the heinous killing and the issue is also gaining importance in Canadian domestic politics.
Negative impact of the export decline: The main reasons for the sudden drop in Russian oil exports to India in the last two and a half years are the decrease in the discount rate of Russian oil. Along with this, the ongoing security crisis in the Red Sea has increased transportation costs. The cost of tanker insurance and other shipping costs has increased due to sanctions imposed by the United States and the West on the transport and sale of Russian fuel oil for starting the war in Ukraine. In addition, Washington’s recent ban on Russian-flagged oil tankers has complicated these fuel exports again.
In addition, imports have increased as part of India’s long-term contracts with Middle Eastern oil suppliers. In addition, some private refineries in India have changed their sources as Venezuelan oil returns to the market.
However, in the long run, India will continue to demand cheap Russian petroleum. Western sanctions imposed on Russia for its invasion of Ukraine forced the country to make major concessions in oil sales. India took advantage of this opportunity to import cheap fuel oil.
The United States and the European Union countries set a price ceiling on Russian oil (below $60 per barrel). India and China took advantage of this price ceiling to import cheap oil from Russia. India was dependent on the Middle East for its energy imports. But getting cheap oil from Russia has led to a new polarization in their imports. This has helped India reduce its economic costs.
Source: Business Standard
