U.S. Pushed for India's Purchase of Russian Oil as Ukraine Conflict Erupted. What Sparked the Shift
The relationship between the United States and India, particularly regarding oil imports, has undergone significant changes in recent years.
During the Trump administration, US crude shipments to India surged over 50%, now making up 8% of India's oil imports. This drastic shift in energy ties has seen India become the biggest buyer of seaborne crude from Russia, a country under Western-led sanctions over its war in Ukraine.
Initially, US officials supported and encouraged India’s continued imports of Russian crude to stabilize global energy markets amid upheaval. However, under the Trump administration, there was unpredictability and mixed signals regarding India’s relations with Russia, creating challenges for New Delhi in managing its energy and defence ties with Moscow.
Later, the US increased pressure on India by imposing tariffs and diplomatic pushback against India’s growing imports of Russian oil, aiming to discourage this trade. This shift introduced significant trade tensions, including raised tariffs on Indian exports to the US linked to India's refusal to curtail Russian oil purchases.
In February 2024, US Assistant Secretary of State for Energy Resources Geoffrey R. Pyatt noted that India's plentiful purchases of Russian oil since the start of the Ukraine war had served the twin objectives of keeping global crude prices under check while serving its own citizens with affordable fuel.
Former US Ambassador to India, Eric Garcetti, admitted that the US encouraged India to buy Russian oil at a price cap to stabilize global prices. US Treasury Secretary Janet Yellen stated in November 2022 that Washington was happy for India to continue buying as much Russian oil as it wants, provided it avoids Western insurance, finance, and maritime services bound by a price cap mechanism.
However, Trump's pressure on India comes after he signalled fresh sanctions on Moscow if it did not make progress towards a peace deal with Kyiv. Trump has threatened to increase US tariffs on goods from India due to its purchases of Russian oil. In response, India has vowed to protect its interests.
Moscow is anticipating talks this week with Trump's special envoy Steve Witkoff. It remains to be seen how these discussions will shape the future of US-India relations and energy trade.
References: 1. The Diplomat 2. Reuters 3. The Hindu 4. Bloomberg
- Despite the US-India relationship experiencing shifts in oil imports, exports between the two countries have yet to significantly impact the broader economy.
- Amid the ongoing conflict in Ukraine and the resulting sanctions on Russia, some experts see India's role in sports diplomacy as a potential avenue to improve the relationships among involved countries.
- Meanwhile, the unpredictable weather patterns have caused concerns for crop yield in India, potentially leading to inflation in food prices and affecting the overall economy.
