When Joe Biden, the U.S. President, imposed sanctions on Russian oil, I wrote that the move was unimplementable and would backfire. Russia sold US$ 67 Billion of oil and gas since the beginning of the Ukraine war, thus belying the American move to throttle Putin’s Russia and its economy.
Winter at his doorstep, the EU was divided over sanctions but did not waste time criticising India and China for continuing to patronise Russian crude, despite sanctions. That is when our usual calm and gentle EAM, Dr. Jaishankar, tore the EU’s hypocrisy, saying that India’s imports were a fraction of the EU’s, who, despite public posturing, were continuing to patronise Russian oil and gas.
G7 put a cap on Russian oil prices at $60/barrel, even as serious differences exist between a few key EU members like Germany and France over any sanctions on Russian energy supplies. The move was followed by an OPEC announcement to cut its crude production, spiralling global crude prices. Russia dismissed the sanctions with a counter-threat of stopping supplies of its gas to the EU countries imposing sanctions.
However, Brent crude had slipped from a high of $139 when Russia first attacked Ukraine to around $ 83. The slackening demand due to Covid lockdowns in China and the resultant lower productivity from its manufacturing sector has dealt a blow to the EU plans. The understanding between Saudi Arabia and China during a recent hyped visit of the Chinese President Xi underlines the tectonic shifts in the U.S. control of OPEC policy decisions. OPEC has decided to cut its output by 2 million BPD until December 2023 to maintain the prices. The U.S. has severely criticised OPEC’s decision to cut its production, which will hurt the EU the most.
For India, Russia is now the biggest oil supplier with a 22% share, ahead of Iraq’s 20.5% and Saudi Arabia’s 16%. Our EAM, while defending the continued import of Russian crude, has dismissed the EU-announced price cap and iterated that India’s policies are made for its benefit and not for others. We have a fair possibility of obtaining Russian crude lesser than the cap prices. Simultaneously India has long-term contracts with the Gulf countries’ traditional suppliers. The Indian Finance minister said, “I would put my country’s national interest, energy security first.”
India has doubled its crude import from Russia since Russia’s Ukraine invasion, from 16m barrels in 2021 to 40m in 2022. India’s GDP growth forecast is expected to be 6.8%, while the World Bank expects it to exceed 7%. The fact that the former Pakistan PM Imran Khan had praised India’s independent foreign and economic policy and its increased global respect explains our global standing, regardless of our domestic political opposition.
I congratulate the Modi-led government, the unfazed Nirmala Sitharaman Ji, and Dr Jaishankar Ji for not cowing down to undue pressure from the West.
Sampath Kumar
Intrépide Voix
