As the West frets, India and Russia strike US$13 billion oil deal

Analysts suggest New Delhi wants to avoid being eclipsed by Beijing as Russia increasingly relies on China amid a changing world order

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Russian President Vladimir Putin (right) and Indian Prime Minister Narendra Modi during their meeting in Moscow in July. Photo: EPA-EFE

Published: 3:30pm, 21 Dec 2024

Cheap oil and geopolitics have brought India and Russia closer together, with a US$13 billion energy pact cementing a partnership that’s as strategic as it is pragmatic, analysts say.

For Moscow, the deal represents a lifeline to a key buyer as it navigates economic isolation. For New Delhi, it’s a strategic win, securing cheap energy to power its economy while asserting its independence from Western pressures.

The 10-year agreement, brokered between Moscow’s state-owned oil giant Rosneft and India’s private refining powerhouse Reliance Industries, will see Russia supplying nearly 500,000 barrels of crude oil per day – equivalent to about 0.5 per cent of the world’s total oil supply – according to sources cited by Reuters.

Before its 2022 invasion of Ukraine, Russia accounted for less than 2 per cent of India’s oil imports. Today, Russian crude dominates the South Asian nation’s energy portfolio, comprising more than 40 per cent of its imports as of June.

A train carrying oil passes near a refinery in Guwahati , India’s Assam state, last year. Photo: AFP

‘Not surprising’

Western sanctions, imposed after Russia’s invasion, have forced Moscow to sell crude at a discount of US$3 to US$4 per barrel compared to global benchmarks. India, heavily reliant on imported energy, has seized the opportunity.