This is a big turnaround that does not suit Moscow. India, in a notable strategic move, is turning to the United States for its oil supplies, thus abandoning Russia, a historic partner within BRICS. This decision, motivated by economic gains and diplomatic tensions, marks a significant reorientation of Indian energy policy.
India returns to American oil
After saving nearly $7 billion in two years by purchasing oil from Russia in local currencies, taking advantage of the sanctions imposed on the latter, India has redirected its oil imports in favor of the United States. Moscow’s request to settle payments exclusively in Chinese yuan to the detriment of the Indian rupee has indeed aroused India’s dissatisfaction, exacerbating existing tensions with China. In response, India has turned to traditional suppliers like the Middle East and the United States.
In March 2024, Indian state-owned oil companies such as Indian Oil, Bharat Petroleum, and private refiner Reliance Industries acquired 7 million barrels of U.S. oil. This approach illustrates the diversification of India’s energy supply sources. It also highlights a strategic preference for US oil, notably West Texas Intermediate Midland (WTI), which is expected to play a crucial role in India’s energy supplies in the coming months.
Soon tensions within BRICS?
Historically, BRICS members have sought to strengthen their economic cooperation in several sectors, including energy, by promoting the use of local currencies to circumvent the US dollar. However, India’s decision to favor US oil, driven by economic and strategic considerations, including complications related to Chinese yuan settlement, could cause tensions within the alliance.
This development could have significant implications for the internal dynamics of BRICS, particularly if other members consider following India’s lead to diversify their sources of energy supply or to meet specific geopolitical imperatives. As India prepares for primary elections, its decision to turn to American oil could be seen as a political move as well as an economic one, likely to influence its relations with Russia and China.
The evolution of India’s oil strategy in the coming months is highly anticipated. It will reveal whether India’s return to American oil is a simple diversification or whether it is a complete break with Russia.
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