Syllabus: GS-III
Subject: International Relations
Topic: Important International institution agreements involving India and/or affecting India’s interests.
Issue: Russian Oil Imports.
Context: India’s petroleum ministry has highlighted the crucial role of Russian crude imports in preventing a surge in global oil prices after Moscow invaded Ukraine in February 2022. Otherwise, it would have faced potential havoc in the market without this strategic move.
Synopsis:
Oil Dependency and Russian Imports:
- Amidst Western sanctions following the Ukraine invasion, India increased its oil imports from Russia at discounted rates, preventing potential disruptions that could have led to a $30-40 per barrel price hike.
- India, the third-largest global oil consumer, heavily relies on imports for over 85% of its crude oil needs.
- The 1.95 million barrels per day imported from Russia played a crucial role in maintaining stability in the oil market.
Diplomatic Stand:
- India defended its decision to continue buying Russian oil, asserting its sovereign right to make decisions based on national interests and economic considerations.
- Indian refiners capitalized on deep discounts offered by Russia, leveraging the country’s refining capacity of over 250 million tones per annum.
Challenges:
- Western sanctions on Russia presented challenges for Indian refiners, impacting logistical arrangements, payments, and insurance.
- Economic sanctions led Indian buyers to opt for delivery-based arrangements, where sellers take responsibility for delivering crude oil to Indian ports.
Conclusion:
- India’s strategic decision to increase Russian oil imports not only served its national interests but also played a vital role in averting a potential global oil market crisis.
- Despite challenges posed by Western sanctions, India remains resolute, emphasizing its sovereign right to secure oil supplies based on economic considerations and market dynamics. The country’s approach underscores its commitment to navigating global challenges while safeguarding its energy security.
Few Facts to know :
Current Oil Scenario in India:
India, the third-largest global oil consumer at 5 million barrels/day, faces rising demand, importing 212.2 million tonnes of crude oil in 2021-22, causing an 86.4% import dependence in April 2022-23.
Initiatives to Reduce Oil Imports:
Efforts to enhance domestic production include policies like the Production Sharing Contract Regime, Discovered Small Field Policy, HELP, NELP, etc. The Ethanol Blending Programme aims to cut dependence, with the E20 target advanced to 2025.
