Nothing’s official yet, but Reuters says it looks like India may be looking to hedge its exposure to the oil crisis by buying oil directly from Putin at a fire sale — helping out a friend after sanctions make it hard for him to deal his wares.
Some context: after western nations sanctioned Russian energy, global oil prices shot up as supply got cut off. Now India, who imports 80%+ of its oil needs, is spending more of its foreign reserves to buy expensive oil from the US and Mid East, which is pulling the rupee down.
Meanwhile, the Russians are ready to sell their oil for pennies on the dollar — eager to fund the war and to save trade. Could there be a win-win situation for both of our nations?
What will it take? 🤔
- Abandon existing contracts with suppliers from the US and Middle East
- Indian refineries will have to invest to change machinery to suit new crude refining processes
- Negotiate a long term deal with Russia for a set price — hard to do in a volatile market, bubbling with so many variables
Bottomline — it’s a tricky move geopolitically. Russia has been a major and reliable trading partner for us for decades. However, a faction of citizens and analysts believe the US and the Middle East could be alienated, and right next to Russia up there could be India, treated as a global pariah.