Paper: GS – II, Subject: International Relations, Topic: India Relations with Major Power, Issue: US Sanctions Russian Oil.
Context:
The U.S. has sanctioned Russian oil giants Rosneft and Lukoil for financing Moscow’s war in Ukraine, raising global oil prices by 3% and altering energy trade dynamics.
Key Takeaways:
India–Russia Energy Ties:
High Dependency on Russian Oil:
- Since the start of the Ukraine war, Russia became India’s largest crude oil supplier, providing over 30% of total imports.
- India leveraged discounted Russian crude to cushion its import bill amid global price volatility.
U.S. Sanctions and Global Impact:
Targets of Sanctions:
- The U.S. sanctioned Rosneft and Lukoil, together accounting for over 5% of global oil output.
- The sanctions aim to cut revenue that “funds the Kremlin’s war machine.”
Compliance Deadline: Companies worldwide have until November 21 to wind down transactions with these firms.
Market Reaction: Oil prices surged by 3% following the announcement due to anticipated supply constraints.
Geopolitical Messaging: The sanctions mark Washington’s tougher stance under Trump 2.0 and signal pressure on global buyers, including India and China, to reduce Russian imports.
India’s Position and Response:
U.S. Pressure: President Trump claimed that India has agreed to cut Russian oil imports “to almost nothing” by year-end.
- India remains cautious, balancing strategic autonomy with energy dependence.
Refinery Recalibration: Reliance Industries, India’s top refiner, is planning to reduce or halt imports from Rosneft, aligning with U.S. sanctions and government guidance.
- Other refiners are expected to diversify crude sources toward the Middle East, the U.S., and Latin America.
Strategic Challenge: India must maintain affordable energy access while avoiding secondary U.S. sanctions that could affect banking and trade channels.
Key Challenges and Measures for India’s Energy Security:
U.S. sanctions on Russian oil deepen India’s energy dilemma, forcing it to balance U.S. ties with energy needs. India must diversify imports, invest in renewables, and build long-term energy self-reliance to ensure stability and strategic flexibility.
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