India in trouble for importing Russian crude??

Many nations across the globe, including India, depend on oil and its derivatives to run various aspects of their economies. India depends on a few nations for its oil supply. Some of the nations include- Russia, Saudi Arabia, Venezuela, and the recent nation added to the list of nations we depend on.

Now, the dynamics of the oil trade have changed drastically due to changes in the USA's relations with the rest of the world. Relationships with Russia have become a bit sour with the ongoing war in Ukraine. Many measures have been taken to curtail the war with Ukraine, but Russia still has the upper hand. Russia manages to fund the war in Ukraine through its trade with the rest of the world, particularly crude oil. And with the US dictating the terms on the global front, India too got hit in the process by ordering a restriction on the use of Russian crude to avoid a major threat and penalties from the United States of America.

Oil imports from Russia (in USD million)

Given the heavy demand, it is very evident that the cost factor and the geographical factor are among the important factors that India continues to purchase oil from Russia. Though not fully closed door for India to obtain oil, it’s kind of a threat given by the US if the units of oil are consumed more than the permissible limits. The recent data suggests that the share of Russian oil imports has fallen close to 35% of the total imports. This is significant, as India has started to look into alternatives to cover up the deficits- basically, the demand in the domestic market. India is also trying to focus on alternative sources of energy, such as wind and solar power, to cater to the energy needs of households.

Russian crude imports from Russia (in Metric tonnes)

Flipside and positives for India

India has already been facing a lot of problems since the beginning of the war. To begin with, the high volatility of the Indian rupee against the US dollar has been one of the important hot topics among economists and market experts. It has become slightly more expensive for India to import more oil from abroad due to the current depreciation of the currency. Invariably, it is affecting the nation's current account balance (CAD).  

The effect is percolating to the general consumers in the economy. Almost all the commodities in the economy see a spike in prices. The recent reports of the Consumer Price Index (CPI) and Wholesale Price Index (WPI) reflect the rise in prices.

The only silver lining I can see in this whole process is that of India looking at alternatives for imports of oil to cater to the needs of the domestic economy. Measures have been taken to strengthen new ties to cater to the needs of the domestic economy, which is still facing the heat of energy deficits. Also, the need to focus on alternative sources of energy has been emphasized more often, making people more aware of the need to conserve and use energy resources more efficiently.