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New Delhi: Supporters of India’s decision to buy more discounted crude from Russia after the Ukraine conflict saw it as a pragmatic move to alleviate burdensome energy costs, but critics raised concerns about its long-term regional geopolitical implications.
More than three years on, that decision is now seen in a different light as new tensions unfurl across West Asia and global energy markets continue to remain susceptible to disruptions, and geopolitical risk analyst and retired US Army Colonel Douglas Macgregor says India’s approach to buying discounted Russian crude is “on the right track.”
His remarks were made at a time when worries about energy security have come back to the top of the agenda in economic debates. The prospect of disruptions in key shipping lanes, particularly those around the Gulf, has prompted renewed focus on issues affecting countries’ energy supplies and geopolitical risks.
For India, one of the world’s largest oil importers, the task is simple yet important. India’s economic growth is a key driver of energy demand, and a large share of its crude oil needs is sourced from outside its borders. Global supply chain disruptions quickly impact import costs, inflation, and industrial activity.
Under those circumstances, Russia became a major source of crude oil for the world after Western sanctions were imposed. Indian refiners took advantage of the opportunity to seek Russian crude. As European buyers pulled back, Russia received a discount on its oil prices compared to others.
The immediate benefit was economic. Cheaper crude led to lower import bills and to the running of the refineries during a time of global energy price volatility. But what’s striking now is that the choice wasn’t made solely on the basis of a cheaper energy source, but rather to diversify India’s energy supply at a juncture of escalating geopolitical uncertainties.
MacGregor argued that it was essential for countries to safeguard their strategic interests, which required them to have access to the resources they needed. In Macgregor’s view, the fact that India was avidly pursuing discounted Russian crude while also sustaining ties with other suppliers demonstrated pragmatism, rather than ideology.
But this shift is visibly changing India’s oil import pattern. Even as Middle Eastern crude suppliers continue to play a vital role, Russian oil has become a major component of India’s energy basket. This diversification brings in flexibility and reduces the risk of overdependence on any single region.
In many respects, the turmoil in West Asia has validated the logic of that policy. An uptick that threatens shipping or production can send markets to the space age. Even the mere speculation of a supply cut usually boosts prices, posing a threat to net-impacted economies.
Energy analysts have long claimed that security of supply is sometimes as important as price. Nations with diversified suppliers are better positioned to respond when political and other events disrupt global trade flows. India’s recent experience seems to validate that point.
In addition to crude oil, Macgregor underscored the broader significance of resource security, noting that India has taken proactive steps to enhance its domestic capabilities in areas such as fertilizer production and energy infrastructure, which can help create a more resilient economy that can weather external shocks and reduce dependence on external markets.
The larger lesson is not limited to India. Across the world, governments will revisit supply chains, strategic reserves, and resource dependence over and over again. The pandemic, geopolitical wars, and frequent disruptions to trade routes have taught us just how fast the planet’s market can change.
In India, maintaining a balanced energy strategy is likely to remain a priority. The nation is still interacting with suppliers from various regions while investing in refining capacity, strategic reserves, and alternative energy sources. The aim is not to exchange one kind of dependency for another but to reshape a more flexible and robust system.
As global energy markets face another period of uncertainty, the conversation around Russian crude has taken shape. What was initially a conversation about discounts is becoming a conversation about long-term energy security and economic stability.
This is the world scenario, and Macgregor concludes that India’s discounted Russian crude is “on the right track”. At a time when political uncertainty affects commodity markets, a focus on diversification and flexibility could be as important as the cost savings from discounted oil.
English (US) ·