India's oil procurement strategy shifts amidst geopolitical turbulence

Recent years have witnessed a significant recalibration in India's oil procurement strategy, marked by a shift away from traditional suppliers like Russia towards increased imports from the United States. This strategic realignment comes in the wake of geopolitical uncertainties and evolving dynamics in the energy landscape. Between February 2022 and December 2023, India and Russia, both members of the BRICS alliance, had initiated crude oil deals worth billions of dollars. These agreements were facilitated by the Modi-led government's decision to leverage sanctions imposed on Russia in the aftermath of its invasion of Ukraine. By procuring oil in local currencies with Russia, particularly amid restrictions on settling trades in dollars, India managed to save nearly $7 billion over the course of two years, according to estimates.
However,tensions arose when Russia insisted that India settle oil payments exclusively in Chinese Yuan, eschewing the Indian Rupee. This demand, which came against the backdrop of strained relations between India and China, posed a dilemma for the Indian government. With concerns about bolstering China's economy through extensive usage of the Yuan, India found itself at a crossroads in its oil procurement strategy.
In response to these challenges, India has opted to diversify its oil sources, with a renewed focus on the United States. While acknowledging the strategic importance of its BRICS partnership, India's decision to increase oil purchases from the U.S. reflects a pragmatic response to geopolitical realities and national interests.
BRICS country India is purchasing more oil from the U.S. and not Russia due to energy flows dwindling amid sanctions. State-owned oil refiners like Indian Oil, Bharat Petroleum, and private refiner Reliance Industries purchased 7 million barrels of oil from the U.S. in March 2024 alone, according to information.The West Texas Intermediate Midland (WTI) crude oil accounted for the bulk of India’s purchase this month in March. The WTI oil is expected to be heavily used in India in the coming months.

(Ira Singh, Asstt Editor, Gandhinagar)