India Strengthens Energy Ties with Russia Amid U.S.-Israeli Iran Conflict

As geopolitical tensions escalate, India is recalibrating its energy strategy, particularly in relation to Russia. Following a significant reduction in Russian crude oil purchases earlier this year, New Delhi is now moving towards deepening its energy cooperation with Moscow. This shift comes in the wake of punitive U.S. tariffs and the ongoing conflict in Ukraine, which has created a complex landscape for energy diplomacy.

Renewed Energy Cooperation

In January, as Indian diplomats sought to ease U.S. tariffs on exports, India curtailed its imports of Russian crude oil, a decision perceived as a concession to the Trump administration. However, recent developments indicate a reversal of this stance. Reports suggest that India and Russia have reached a preliminary agreement to resume direct sales of liquefied natural gas (LNG) for the first time since the onset of the Ukraine conflict. This agreement, reached during a March 19 meeting between Russian Deputy Energy Minister Pavel Sorokin and Indian Petroleum and Gas Minister Hardeep Singh Puri, could potentially conclude negotiations within weeks.

The urgency of these discussions is underscored by soaring energy prices, exacerbated by the U.S.-Israeli military actions against Iran. The potential LNG deal has not been publicly disclosed until now, highlighting the discreet nature of these negotiations.

Implications of Increased Crude Oil Sales

The two officials also discussed increasing crude oil sales to India, which could see Russian oil imports rise to at least 40% of India’s total imports within a month. India has emerged as a significant buyer of discounted Russian crude since the Ukraine invasion, purchasing nearly $44 billion worth last year. This influx of revenue has been crucial for sustaining the Kremlin’s economy during wartime.

India’s energy importers have been instructed to prepare for renewed purchases of Russian LNG. Furthermore, New Delhi has approached Washington for a potential sanctions waiver, indicating a strategic pivot in its energy policy.

Domestic Energy Policy and Global Dynamics

India’s external affairs and petroleum ministries have not commented on the potential LNG deal. However, foreign ministry spokesperson Randhir Jaiswal emphasized that India’s energy policy is driven by the needs of its 1.4 billion citizens, market dynamics, and global conditions. Indian authorities are also acquiring liquefied petroleum gas from Russia, which is not subject to sanctions and is primarily used for cooking.

The Russian energy ministry has refrained from commenting on discussions with India, while the U.S. Treasury Department has not addressed inquiries regarding sanctions relief. The White House and Ukraine’s embassy in Delhi have also remained silent on the matter.

Ajai Malhotra, a former Indian ambassador to Moscow, noted that India is prioritizing its national interests through its longstanding partnership with Russia. He suggested that New Delhi should seek exemptions or accommodations in negotiations with Washington, reflecting the complexities of international energy diplomacy.

The Broader Geopolitical Context

India’s energy strategy has been significantly influenced by external pressures, particularly from the United States. After years of benefiting from discounted Russian crude, India curtailed purchases in response to tariffs imposed by Trump, which reached as high as 50%. The U.S. Supreme Court later ruled these tariffs unlawful, yet the damage to India’s energy procurement strategy had already been done.

The geopolitical landscape shifted dramatically following the U.S. and Israeli attacks on Iran on February 28. Tehran’s retaliatory actions, including targeting vessels in the Strait of Hormuz, have disrupted vital shipping routes for India’s energy supplies. The resulting energy shortages have led to long lines at gas stations and shortages of cooking gas in some areas.

In response, demand for Russian energy exports has surged, particularly as these shipments can bypass the Gulf. Indian refiners began increasing their orders for Russian crude shortly before the U.S. announced a temporary waiver allowing India to purchase some sanctioned cargoes. As oil prices continue to rise, Washington has further relaxed restrictions.

Some Indian policymakers have expressed regret over the earlier reduction in Russian crude imports, viewing it as a concession to U.S. pressures. A government document indicated that this decision could have mitigated the current energy crisis, warning that prolonged disruptions in oil flows from the Middle East could lead to economic challenges, including inflation and a weaker currency.

Strengthening Ties with Russia

Russia, which has maintained a cooperative relationship with India since the Cold War, is leveraging its position to strengthen ties. Any new LNG agreement is likely to be less favorable for India compared to the previous 20-year supply deal with Gazprom in 2012, as the current market dynamics favor sellers.

Executives from Russian state power grid company Rosseti, who visited Delhi for an industry summit, proposed collaborations on power transmission facilities in remote areas of India. If realized, this would mark Russia’s entry into India’s power transmission sector.

Additionally, Russia is keen to enhance air connectivity with India. Timofei Titarenko from St. Petersburg’s Pulkovo Airport has been exploring opportunities for more direct flights to India.

Chief Kremlin diplomat Sergei Lavrov highlighted that 96% of trade between India and Russia is now conducted in rupees and roubles. He emphasized that the enduring friendship between the two nations exemplifies how interstate relations can be built on mutual trust and respect.

Rupee-rouble transactions have become more efficient, with processing times reduced to as little as one day for amounts up to $1 billion, according to a top executive at the Indian branch of Russian lender Sberbank.

For further details, see the original reporting at Zawya.

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