Do you see any problems in India continuing to import crude oil from Russia?

Buying oil from Russia may look like a sweetheart deal for India but it comes with its own set of risks and downside potential. Also, we need to be cautious about the long term repercussions especially in terms of relations with the West, with whom India does bulk of the business. Till now the standard argument has been that total imports of Russian oil are just about a fraction of what EU does. Now that may not hold much longer and here is why.

That was all find as long Russian oil accounted for just about 2-3% of India’s oil basket. Now, Russian oil accounts for almost 25% of the oil basket as of June. At this juncture, the argument of India being a small importer does not hold. The real problem could manifest only when the US and EU ban secondary refined oil that is made out of crude from Russia. Today, India is using Russian crude for almost 25% of its crude processing. There would be trouble if the same is banned and India may not have much choice after that.

To look at it more pragmatically, India has already done its bit for Russia. India has gone out of their way to support Russia at the UNGA, the US Security Council etc. Through all the Western pressure, India has persisted with its support for Russia. To an extent, the West has also not insisted too hard, but that may be changing now. Going ahead, it would be hard for India to still justify buying Russian oil amidst all the human rights violations in Ukraine.

Now, India needs to show more decisiveness. It is the right moment for India to draw out a detailed time table to exit from Russian support. India may be buying Russian oil at much lower prices, but India could face real problems in selling its refined oil to western consumers. Even today, it is the US who is India’s largest trading partner and the biggest trade surplus source. It is high time India winds down its support to Russia in a time bound manner.