United States President Joe Biden and India Prime Minister Nerendra Modi met on Monday to discuss Russian energy imports. As the Russian war in Ukraine continues and war crimes and atrocities come to light in the Kyiv suburb of Bucha, the United States and Europe are getting more serious about hitting Russia where it hurts, with sanctions on Russian energy. To make sure that these sanctions have their desired impact, it’s crucial that Russia is not able to easily pivot and sell more energy to other fuel-crunched economies, such as China and India. To this end, Biden is meeting with Modi today to try to ensure that India will not snap up temptingly discounted Russian oil, gas, and coal to ease the impact of the global energy crunch on the subcontinent.
"President Biden will continue our close consultations on the consequences of Russia's brutal war against Ukraine and mitigating its destabilizing impact on global food supply and commodity markets," United States Press Secretary Jen Psaki said in a statement on Sunday. Biden's Monday meeting will not propose any hard and fast limits on India’s Russian energy imports, but will seek to gain assurance from Indian leaders that there will not be a "rapid acceleration" in purchases.
Concern that India will provide a reliable wartime market for Russian energy is well-founded. “Lured by steep discounts following Western sanctions on Russian entities, India has bought at least 13 million barrels of Russian crude oil since the country invaded Ukraine in late February,” Reuters reported this week. “That compared with some 16 million barrels for the whole of last year.”
In order to support India’s cooperation with a Russian energy embargo, the United States has made clear that it intends to help the South Asian nation’s efforts to diversify its energy imports. Of course, the United States intends to do so by selling more of its own oil and gas to New Delhi. At present, Russia is not a major supplier of oil to India. “India gets the bulk of its energy supplies from the Middle East and around 7.5 to 8 percent from the US,” reports Indian new outlet the Deccan Chronicle, “while the procurement from Russia in the past was less than one percent.” While Russia provides just a fraction of Indian energy supplies, the country has indicated that it will ramp up these imports, and any small increase from an economy the size of India’s stands to seriously ease the pressure of sanctions on the Kremlin.
Indian External Affairs Minister S. Jaishankar has made clear that India is “strongly against” the Russian invasion of Ukraine, and has said that “if India has chosen a side, it is a side of peace and it is for an immediate end to violence.” Despite this stance, there is doubt as to whether this condemnation will extend to India’s energy imports. As the nation is faced with rising oil prices and a potential looming coal crisis, India’s options are limited as New Delhi tries to balance the needs of the Indian population with the country’s external affairs with respect to Russia and Ukraine.
India is not alone in this economic and political ambivalence. The European Union, one of the loudest critics of Putin’s war in Ukraine, has been similarly unable to wean itself off of Russian energy imports. Even as the continent gets more serious about energy sanctions on Russia, the most concrete decision making has been limited to Russian coal, and has tiptoed around the much larger issue of liquefied natural gas (LNG) which provides 45% of the European Union’s gas imports, and a full half of Germany’s. Due to the dependence on Russian energy, and the severity of the energy crunch without the added pressure of cutting ties with Russia, European nations have been unable to agree to sanctions terms. In fact, Europe’s consumption of Russian oil and gas has actually increased since the invasion of Ukraine. According to Bruegel, a Belgian think tank, Europe bought US$24 billion worth of Russian oil and gas in March alone.
The Kremlin has been shoring up its energy dominance around the world for decades, and it’s paying off. With such massive economies as the European Union and India unable to just say no to Russian energy, Purin has been able to keep a formidable amount of leverage on the world stage. All of the strongly-worded press releases in the world won’t make a whit of difference as long as the world keeps funneling billions of dollars to Russia every month in order to keep the lights on.
By Haley Zaremba for Oilprice.com
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