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India helping west meet it’s energy demand

  • May 18, 2023
  • Posted by: OptimizeIAS Team
  • Category: DPN Topics
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India helping west meet it’s energy demand

Subject : International Relations

Concept :

  • The European Union’s (EU) foreign and security policy chief said the EU should crack down on India reselling Russian oil into Europe as refined fuel.

Import from Russia

  • Since Russian invasion of Ukraine, India has emerged as one of the biggest buyers of Russian oil.
  • India’s imports of Russian oil rose tenfold last year.
  • In 2021 Russian oil accounted for just 2% of India’s annual crude imports. That figure now stands at almost 20%.

Export to the west

  • The access to cheap crude oil has allowed the country’s refiners to register massive profits and export record-level refined petroleum products to Europe and the USA.
  • Indian refiners exported an average of around 284,000 barrels per day (bpd) of refined petroleum products to Europe in the December-April period, up from about 170,000 bpd in the year-ago period.

India’s defence

  • India has defended its purchase of oil by saying that given its huge reliance on energy imports and with millions living in poverty, it isn’t in a position to pay higher prices.
  • Further, Russian crude, if substantially transformed in a third country, is not treated as Russian anymore.

Sanctions against Russian oil

  • Soon after the Russian invasion of Ukraine, the West started to curtail their dependency on Moscow’s energy imports in a bid to squeeze its economy.
  • Germany : It suspended the launch of the new Nord Stream natural gas pipeline.
  • Canada and the US : Banned the import of Russian crude oil.
  • Group of seven (G7) :
  • They enforced a “price cap” on Russian crude.
  • They believed the price cap imposition would cripple Moscow’s economy and severely impact its ability to fund its battle against Ukraine.
  • However, Russia responded by increasing its oil exports to India and China.

How India is helping the West meet its energy demand?

  • As the sanctions imposed on the import of Russian oil aren’t applicable to India, the amount of fuel from Moscow entering the country has reached a record high.
  • This has allowed India to not only easily meet its own energy demands but also that of other countries.
  • A Bloomberg report noted that India is importing more and more oil from Moscow and refining it into fuel, which is being supplied to Europe and the US.
  • India’s diesel exports to the Europe rose 12-16% to 1,50,000-1,67,000 bpd in the last fiscal year.
  • India boosted its vacuum gas oil (VGO) shipments to the US.

Surge of prices

  • Currently, four factors are leading to a surge in the price of oil, coal, and other energy sources. These are:
  • the disruption of oil supply chains due to the US sanctions on Russia post the Russian invasion of Ukraine,
  • the weakening of the US-Saudi Arabia 1970s deal that led to the dollar becoming the world’s reserve currency and leading to the sale of oil and currencies other than the dollar,
  • high inflation in developed countries, including the US, Canada, Germany, and the UK, and
  • the US effort to create alternate supply chains excluding China.
India helping west meet it’s energy demand International Relations

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