Importance of India as a global diplomatic force

The interface of global politics and energy markets is a complex and conflicting one. India is skilfully navigating these troubled waters

The Center for Research on Energy and Clean Air (CREA) recently reported that Europe has been importing Russian oil via India, China, the UAE, among others. It further said that such European fuel imports have crossed $42 billion worth crude.

The relationship between Europe and India when it comes to the importation of crude oil is a complex one. On the one hand, Europe cannot directly import crude oil from Russia due to sanctions and political tensions. On the other hand, India has emerged as a key refining hub for Europe, which sources its crude oil from various parts of the world, including Russia. Since the sanctions, Europe's refined fuel imports from India is set to cross above 360,000 barrels a day, overtaking that from Saudi Arabia. Diesel has become one of the largest components of India-EU trade.

This has not only demonstrated India's economic strength and resilience, but also highlighted its growing importance as a diplomatic player on the world stage. In recent years, India has emerged as a key player in the global energy market, with its refining industry providing a vital link between oil-rich countries and energy-hungry markets.

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The political and trade implications of India's rising energy influence are significant. By providing a reliable source of energy to Europe, India is helping to offset the impact of economic sanctions imposed on Russia by Western countries. This has allowed Europe to maintain a degree of energy independence from Russia, reducing its reliance on a country that has historically used its energy exports as a political weapon. It has also helped to diversify Europe's energy supply, reducing the risk of price spikes and supply disruptions.

By importing crude oil from Russia, refining it in India, and exporting it back to Europe, India is helping to offset the impact of these sanctions and provide a reliable source of energy for the continent. While this arrangement can help to reduce Europe's direct dependence on Russian oil, it does not eliminate it entirely. Russia remains a significant player in the global energy market, and any disruptions to its oil production or exports could still have significant implications for global energy prices and supplies, including those sourced from India.

India has historically maintained a non-aligned foreign policy and has tried to balance its relationships with various countries, including the United States, Russia, and China. However, as India's strategic importance grows, it may find itself caught in the middle of conflicts between its various partners. If tensions between Europe and Russia were to escalate, for instance, it could impact India's ability to continue exporting refined fuel to Europe. But then, Russia would still need markets which can it sell its crude oil to.

However, while Europe is benefiting from India's oil refining capabilities, it is also taking a stand on the ongoing conflict between Russia and Ukraine. This has put Europe in a somewhat hypocritical position, as it is using energy that has been produced in part through economic ties with Russia while simultaneously criticising Russia for its actions in Ukraine. However, this does not excuse the fact that Europe's reliance on Russian crude oil, even indirectly, undermines the effectiveness of its sanctions against Russia. If Europe wants to send a strong message of disapproval to Russia, it must take concrete steps to reduce its dependence on Russian energy, rather than relying on intermediaries to do its dirty work. But then energy security has domestic political implications for Europe. This dichotomy highlights the complex and sometimes conflicting interests at play in global politics and the energy market.

While India's role in providing energy to Europe is an important one, it is not without risks and challenges. As the world transitions to cleaner and more sustainable sources of energy, the continued reliance on fossil fuels produced through economic ties with Russia could draw criticism and calls for change. There is no guarantee that some of these nations in the time ahead could green-shame the same supply chain as fossil oil. Moreover, the ongoing conflict between Russia and Ukraine could escalate and potentially disrupt global energy supplies, including those sourced from India.

From India's global play perspective, this strategy makes perfect sense. It serves to help its friendly nations, it collects previous foreign exchange, it uses the large oil refining capacities it has, it helps Russia in crude oil offtake. It’s a politico-trade win-win-win for all.

(Srinath Sridharan is author, policy researcher and corporate adviser. Twitter: @ssmumbai)

Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH