AA Edit | India Can Gain If It Heeds US’s Russia Oil Sanctions

In complying with the sanctions imposed on two of the biggest Russian oil producers in Lukoil and Rosneft, India will be joining US-EU led efforts to pressure Vladimir Putin to end the war that he began nearly four years ago by invading Ukraine.

Sanctions aimed at the very heart of Russian oil and gas exports that keep funding Mr Putin’s war without stressing out the Russian public with inflation may be more effective than tariffs that will eventually come out of American pockets.

Donald Trump’s strategic switch, which comes only into his 10th month in office towards stopping a war he said he could do on his first day back at the White House, may be a tad late, but the sanctions are worth trying because nothing else seems to have worked to bring Mr Putin to the negotiation table with any kind of seriousness towards ending a senseless war.

To comply with the sanctions, India must scale back its Russian oil purchases that amount now to nearly 1.4 million of about four million barrels a day of consumption and which have saved the nation as well as many in Europe considerable sums in billions of dollars in the last three years.

The post-sanctions spike in oil prices is not expected to not hurt too much at a time when global inflation is much lower than in the period soon after the war broke out when the global economy took a hit from Mr Putin’s misadventure.

India will be paying a price for complying with this extreme economic diplomacy, but that will also bring about a change in perceptions ahead of the on-off trade talks with the US that seem better poised now and are expected to yield positive results with some degree of give and take as both parties show a willingness to shift from rigid negotiating positions.

To conflate the issue of complying with sanctions and the US trade deal would, however, be presumptuous because there can never be any certainty when dealing with the capricious US President who just cancelled trade talks with Canada because he did not like a television advertisement that mocked him and his tariff tantrums.

What India will be doing in falling in line with the global pressure tactic on Mr Putin is to take a moral position on the war which was always ambiguous considering how close India’s ties are with Russia and how much the nation stood to gain in stepping up Russian oil use from two per cent before the war to nearly 40 per cent in order to save the people’s money while giving the Indian customer the price at the pump he is accustomed to.

The question of how effective this latest round of sanctions will be is a billion-dollar question. Russia has so far withstood Joe Biden’s sanctions on about 5,000 targets in about 140 different sanctions packages from 2022. But its war effort is being underwritten by the $600 million per day that it is said to be earning from oil sales.

It is a fact India was unfairly targeted by Mr Trump to be a secondary tariff target, and the only consolation now is if the sanctions indeed help towards arriving at a ceasefire, then India can hope to benefit in peace time by being able to source the same oil without a moral dilemma. India will be a major winner among many if peace were to prevail for it can hope to have a favourable trade deal with the US and feel free to source oil from where it is best priced.