In January, when India was negotiating with the US to get relief from punitive tariffs imposed on exports, New Delhi had cut purchases of crude oil from Russia. The move was considered a “tough compromise” made under pressure from Donald Trump. But after just two months the situation has completely changed. Now India and Russia are once again moving rapidly towards strengthening their energy relations.
New initiative on LNG and oil
Quoting Jerusalem Post, the news says that an agreement is being reached between India and Russia to restart the direct supply of Liquefied Natural Gas (LNG). This will be the first time after the Ukraine war that Russia will sell LNG directly to India. This “verbal consensus” was reached in a meeting between Russian Deputy Energy Minister Pavel Sorokin and Union Minister Hardeep Singh Puri in Delhi on March 19. Along with this, it has also been agreed to increase the supply of crude oil from Russia. It is estimated that oil imports from Russia may double to 40% in about a month.
Impact of West Asia crisis
The US-Israeli attack on Iran and subsequent Iranian retaliation have shaken the global energy market. In particular, the tension in the Strait of Hormuz had a direct impact on India’s energy supply, because almost half of the country’s oil and LNG comes through this route. Its impact was visible in the country as well – long queues at petrol pumps, shortage of cooking gas supply, sharp rise in energy prices etc. were seen.
Why was the purchase reduced earlier?
India had earlier purchased cheap crude oil from Russia in large quantities, which also supported Moscow’s economy. But later, India cut down on Russian oil purchases after America imposed heavy tariffs on Indian goods. However, now after the situation has changed, India again seems to be leaning towards Russia, giving priority to its national interests.
Fear of economic challenges
According to government assessments, if oil supplies from the Middle East remain disrupted for a long time, inflation may rise, rupee may weaken, foreign debt may increase and exports may decline by 2% to 4%. Former diplomat Ajay Malhotra says that India has chosen the path which is in its interest and which is based on long-standing trusting relations with Russia.