Petroleum Minister Puri says discounted Russian crude saved global economy from $200/barrel oil shock; U.S. criticism reignites energy diplomacy debate
New Delhi (Economy India): India has issued a strong rebuttal to U.S. criticism over its Russian oil imports, asserting that New Delhi has operated strictly within international rules and played a stabilizing role in global energy markets.
Petroleum and Natural Gas Minister Hardeep Singh Puri, writing in The Hindu, said India’s approach has not only shielded its own economy but also spared the world from a potential oil crisis where crude prices could have spiraled to $200 per barrel.
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“India broke no rules. We complied with the G7 price cap mechanism, designed to limit Russia’s revenues while ensuring stable oil supply. Our actions prevented market chaos and kept energy affordable globally,” Puri emphasized.
India Hits Back at U.S. on Russian Oil: “Followed Global Rules, Stabilized Market”
U.S. Pressure and Accusations: Navarro Labels It “Modi’s War”
The remarks came days after former Trump trade adviser Peter Navarro launched a scathing attack on India during a Bloomberg TV interview. Navarro claimed that India’s decision to buy and refine Russian crude effectively bankrolls Moscow’s war machine in Ukraine.
Navarro controversially described the Ukraine conflict as “Modi’s War”, alleging that:
India buys cheap Russian oil.
Refines it in Indian facilities.
Exports refined products at higher global prices.
According to Navarro, this cycle indirectly funds Russia’s invasion and emboldens Moscow and Beijing’s strategic partnership. He warned that India’s growing closeness with Russia and China could create “dangerous consequences” for global security.
The comments follow U.S. moves earlier this year when Washington imposed 50% tariffs on Indian exports in retaliation for discounted Russian crude purchases.
India Hits Back at U.S. on Russian Oil: “Followed Global Rules, Stabilized Market”
India’s Rising Dependence on Russian Oil
India, the world’s third-largest energy consumer, has historically relied heavily on Middle Eastern oil. But the Ukraine war reshaped global flows, and Russia emerged as a key supplier.
Before the war (2021): Russia supplied just 0.2% of India’s crude (≈68,000 barrels/day).
By May 2023: Russia’s share surged to 45%, with India buying ≈2 million barrels/day.
2025 (Jan–July): Imports stabilized at ≈1.78 million barrels/day, making India the second-largest buyer after China.
Over the last two years, India has spent more than $130 billion annually (₹11.3 lakh crore) on Russian crude—an amount reflecting both rising demand and discounted supplies.
Financial Windfall for Indian Oil Companies
Cheap Russian oil has had a transformative impact on Indian state-owned oil firms:
2022–23: IOC, BPCL, and HPCL earned just ₹3,400 crore in combined net profits.
2023–24: Profits surged 25-fold to ₹86,000 crore, driven by refining margins.
2024–25: Profits moderated to ₹33,602 crore, still nearly 10x higher than 2022 levels.
This surge in profitability helped stabilize government revenues, improve fiscal space, and protect consumers from runaway fuel inflation.
Russia’s Stand: “No Alternative to Our Crude”
Russia has strongly supported India’s stance. Senior diplomat Roman Babushkin, speaking in New Delhi earlier this month, said:
“There is no alternative to Russian crude, particularly at the price points we offer. India benefits from discounts averaging 5% below global benchmarks.”
Moscow sees India not only as a key buyer but also as a strategic partner that helps diversify its energy export base away from Western markets.
Why India Stands Firm
India’s energy diplomacy rests on three core pillars:
Energy Security: With 85% of crude imported, diversification is essential. Russia offers steady, discounted supplies.
Price Stability: Russian crude helps India control inflation. Without it, Indian consumers could face higher fuel prices, pushing up costs across the economy.
Strategic Autonomy: By adhering to the G7 price cap, India signals compliance with global frameworks, while retaining independence from U.S.-led pressure.
Puri’s statement encapsulates this balance:
“India has not only secured its own interests but also prevented a global oil shock. Our role has been stabilizing, not disruptive.”
Global Energy Dynamics: The Price Cap Debate
The G7 oil price cap—set at $60 per barrel for Russian crude—was designed to curb Moscow’s revenues while preventing supply disruptions. India has quietly adhered to this framework, using Western insurance and shipping services for most cargoes.
However, critics in Washington argue that India’s refiners have exploited loopholes by reselling Russian-origin refined products to Europe and the U.S.—a charge India rejects as “legally compliant trade.”
Analysts note that without India and China absorbing Russian barrels, global crude markets could have tightened sharply, risking prices well above $150–200 per barrel.
Strategic Risks and Diplomatic Tightrope
India’s balancing act carries risks:
Geopolitical Strain: U.S. voices like Navarro’s highlight growing unease in Washington about India’s oil diplomacy.
Trade Retaliation: Higher tariffs on Indian exports could become a recurring tool of pressure.
Geopolitical Optics: India risks being seen as “funding Russia’s war” even while complying with international rules.
Yet, New Delhi’s calculus remains clear: cheap Russian oil is indispensable to sustaining growth, controlling inflation, and fueling development.
For now, India remains resolute. As Puri concluded:
“Our duty is to the Indian consumer. We will continue to act responsibly, but always in India’s interest.”
India’s Oil Story in Numbers
85% – India’s crude oil import dependency.
$130 bn – Annual spending on Russian crude over past two years.
45% – Share of Russian crude in India’s imports at peak.
25x – Jump in state oil firms’ profits in FY2023–24 due to discounts.
$200/barrel – Price shock avoided, according to Puri.
Expert Voices: Balancing Realism and Diplomacy
Energy analysts and economists are largely aligned with India’s stance:
Madan Sabnavis (Bank of Baroda):“India’s oil imports from Russia are a matter of economics, not ideology. The discounts keep inflation manageable.”
Daniel Yergin (IHS Markit):“India and China’s purchases have prevented a global supply shock. Without them, prices would have gone through the roof.”
C. Raja Mohan (Policy Expert):“India is walking a diplomatic tightrope—engaging the U.S. on defense and China on competition, while relying on Russia for energy.”
Looking Ahead: Can India Sustain the Balance?
India’s oil strategy faces three immediate challenges:
U.S. Pressure May Intensify: Especially under a Trump-led administration, tariffs and accusations could rise.
Market Volatility: If the Ukraine war escalates or supply chains tighten, price caps may face renewed stress.
Energy Transition Goals: While Russian crude offers short-term relief, India also aims to expand renewable energy and reduce fossil fuel dependence.
For now, India remains resolute. As Puri concluded:
“Our duty is to the Indian consumer. We will continue to act responsibly, but always in India’s interest.”
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