GG News Bureau
New Delhi, 14th September. One man’s trash is another man’s treasure, as the saying goes. Those who fail to recognize a commodity’s intrinsic value usually lose in the end. One such commodity is Russian oil. While the West is desperate, India is emerging as the winner of its new price-control initiative.
Russia offering discounted oil to India
According to a Business Standard report, Russia is offering India greater discounts on its oil. Russia, it appears, does not want India to accept the oil price cap mechanism that the G7 countries are attempting to impose. In August, Russian oil was $6 cheaper per barrel. With the new offer, there is a good chance that Russian Ural crude will cost the Indian government less than Iraqi oil.
“In principle, the ask in return is that India should not support the G7 (Group of Seven) proposal,” an official with the Ministry of External Affairs (MEA) said. Following discussions with all partners, a decision on this issue will be made later. These “significant discounts” will be greater than those offered by Iraq in the previous two months.”
India on the precipice
The latest Russian offer demonstrates how India has walked the fine line between friendship with Russia and friendship with Western countries. India’s position in the aftermath of the war has been hotly debated, and it is possibly the most discussed controversy on geopolitical forums. The main reason for this is that India has simply refused to accept the Western liberal narrative of the war.
When the Biden administration learned of the first bilateral fistfight on Ukrainian soil, it immediately sought to blacklist Russia as a whole. The US imposed blanket sanctions on Russia, taking advantage of the fact that it hosts the majority of the multinational forums in its geography. Putin’s country was no longer a member of the international financial system.
But Putin was ready. Russia’s revenue sources are oil and gas. It provided discounted rates to countries that chose not to take an official stance on the issue or explicitly supported it.
Increased Russian oil imports
India decided to increase its imports of Russian oil. Prior to March 2022, India imported approximately 85% of its oil requirements, with the Gulf countries accounting for the lion’s share. More than half of the oil came from these three countries: 24% from Iraq, 18% from Saudi Arabia, and 11% from the UAE.
Russian oil, which previously accounted for only 1% of our crude imports, now accounts for more than 20% of our import requirements. It had already dethroned Saudi Arabia from second place and was on the verge of supplanting Iraq as India’s top oil supplier. The icing on the cake is that India is purchasing oil at a significant discount from both Russia and Iraq.
Competence was bred through competition
Yes, Iraq was concerned about losing the Indian market after Saudi Arabia was replaced by Russia. To save itself, it offered its oil to India for $9 less than the Russian price. Iraq supplied 1.39 million barrels of oil per day to India at a cost of $93 per barrel. It was a significant increase of 26% over May’s supply. As competition from Iraq increased, Russia began to offer more lucrative deals to India.
Previously, Russia only supplied Urals to India. However, as they close their doors to the European market, other blends, such as the Eastern Siberia-Pacific Ocean (ESPO) blend and the Caspian Pipeline Consortium (CPC) blend, are making their way into India. The Russian state’s flagship crude is the ESPO blend.
The US strategy failed miserably
While the Indian oil industry was busy exploiting the free market, the countries where this concept is said to have taken shape were enraged. Their leader, America, tried a variety of measures to halt the flow of Russian oil, but almost all of them failed. They began with soft measures such as strengthening India against China, refocusing on QUAD, and establishing the Indo-Pacific Economic Framework, among others.
When things did not go as planned, they tried hard tactics such as lecturing India on religious freedom and cornering our Foreign Minister on “war funding,” among other things. When its initiatives failed, the United States devised a new strategy. It instructed the countries, including India, to continue purchasing Russian oil at a lower price. Meanwhile, Russia announced that it would cease exporting oil and other commodities to countries that had agreed to the new Western plan.
India will not agree to pierce the cap
While Indian policymakers were debating the strategy, the United States handed over $450 million to Pakistan for F-16 fleet sustainment programmes. India not only expressed strong opposition through it, but it also snubbed Biden’s IPEF by withdrawing from it. The message was clear: if the US engages in friendly relations with a terrorist nation, bilateral relations will suffer.
The demise of IPEF was a sign that Indian policymakers were also concerned about the oil cap strategy. Now that Russia is offering more discounts to India, it should be clear that India will not follow the West’s suicidal plan.
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