There is a saying in English: every person has a weakness and weakness can be leveraged. In the same way, if one country over-relies on the other, the latter can use it as leverage for their own use.
The latest Russia-Ukraine war is the best example, to be more specific.
When Europe imposed heavy sanctions on Russia, the latter retaliated by stopping energy exports. Since Russia is the major energy exporter to Europe, the move has crippled several nations. Countries like Germany have shut down several industries. Several European countries are having inflation at a record high, which has resulted in mass protests by its citizens. This clearly shows how Russia has utilized its leverage and crippled the European economy.
India has a similar problem. It is in the oil sector. India, which is the third largest importer and consumer of oil, imports nearly 85 per cent of crude oil from other countries. The percentage is not small. Where does India get the oil from? Mostly from Gulf countries. Saudi Arabia, UAE, Iraq, Kuwait, and Oman are major gulf countries that export oil to India. The Gulf nations are using this as leverage against India. We have seen how these nations reacted to the Nupur Sharma issue. The OIC, as always, issued a statement on October 27, about India illegally occupying Jammu and Kashmir. Hear it carefully, India illegally occupying Jammu and Kashmir. It often speaks up about imaginary Muslim harassment in India. Don’t think these nations care about Muslims. Because the same OIC refused an inquiry against Uyghur atrocities by the Chinese government. What does this say? It is not religion that matters, it is money. Religion is just a mask.
The Indian government has been observing these gulf nations’ actions carefully and has been waiting for the opportune moment. The Russia-Ukraine war has provided one.
India, which has been looking at diversifying its oil imports has utilized this advantage and started buying oil from Russia. The US and Europe imposed a ban on Russian oil after the latter started its special operation in Ukraine. To sell its oil, Russia offered a discounted oil to India. As the gas prices were skyrocketing due to war and the ban on Russian oil, India cashed this offer and started to buy Russian oil at a discounted price.
Russia which was not even in the top 10 at one point became India’s second-biggest oil supplier dethroning Saudi Arabia. Although the latter regained the second spot again, it did not last for a long time. The latest report by Reuters shows Russia is again the second largest supplier to India.
Iraq is still the largest oil supplier to India, but the imports from the country have been the lowest in the year. Not just Iraq, the oil imports from UAE is at the lowest in 16 months, and Saudi Arabia’s oil exports fell to a three-month low.
Do you know why India has reduced its oil purchase from the Middle East? You may say Russia, well it is just half right. Because India has not just increased its oil import share from Russia, it is the whole Caspian Sea. Which countries comprise this? Countries like Kazakhstan, Azerbaijan and Russia.
To put it plainly, India’s imports from the Capsian Sea region rose from 24-28%, while the imports from the middle east fell to 56 from 59.
India is clearly trying its best to diversify its oil imports so that the middle east does not have the influence it has now.
There is more to the story. India is not just moving from the middle east to the Caspian sea, but it is looking even at Africa and South America. India is already importing oil from Columbia, Brazil and Gabon. It is working on exploring oil in Brazil and Gabon as a part of diversification. In return, India expects a long-term deal with these countries. Although these countries’ oil export share to India is minimal, it is expected to rise in the future.
Apart from importing, India is also working on producing 25 per cent of the oil demand by 2030.
At the same time, India is also working on renewable energy. It is ranked fourth in renewable energy capacity. India is currently ranked fourth in wind energy and fifth in wind energy. The current government is also encouraging Indian citizens to move toward electric vehicles. To boost this, India is offering several incentives to automobile companies through PLI.
The Russia-Ukraine war knows how oil can be used as a weapon to cripple any nation. India knows this, which is the reason it has set up strategic petroleum reserves at Visakhapatnam, Mangalore and Padur. These reserves can meet the nine days of demand.
India is planning to expand the reserves to other cities so that it can use them in case of serious disruptions to the global crude oil supply chain.
Through these moves, India is working on steadily replacing renewable energy with fossil fuels and making India Atmanirbhar in the energy sector.