India and Russia have signed a historic oil trade agreement, marking their largest energy deal ever. Under the deal, Rosneft, Russia’s state-owned oil company, will supply 500,000 barrels of crude oil daily to Indian refiner Reliance Industries. Valued at $13 billion annually, the agreement will begin in January 2024.
A Strengthened Energy Partnership
The agreement includes a ten-year extension option, emphasizing the growing energy ties between the two nations. Russia continues its shift toward Asian markets, especially India and China, due to Western sanctions linked to the Ukraine conflict. These sanctions have forced Russia to sell its oil at discounted rates, creating economic advantages for buyers like India.
This deal solidifies India’s role as a leading buyer of Russian crude. Furthermore, it signals a significant shift in global energy markets as Russia strengthens ties with non-Western partners to sustain its oil exports.
Strategic and Economic Impact
The agreement represents 0.5% of global oil supply and is valued at $13 billion annually. While Rosneft and Reliance Industries have not disclosed full details, sources confirmed the deal was finalized at a Rosneft board meeting in November. This announcement also coincides with Russian President Vladimir Putin’s planned visit to India, underscoring the strategic importance of the partnership.
India Becomes Russia’s Top Oil Buyer
India now imports more than one-third of its crude oil from Russia, overtaking traditional suppliers from the Middle East. This shift positions India as the largest buyer of Russian oil, a title previously held by the European Union before sanctions limited its purchases.
India benefits from Russian crude priced $3 to $4 lower per barrel than alternatives. Consequently, the cost advantage has reshaped India’s energy imports, reducing reliance on Middle Eastern suppliers like Saudi Arabia.
As the world’s most populous nation and one of the fastest-growing energy markets, India remains a key battleground for global oil exporters seeking market share. This deal with Russia enhances India’s energy security while cementing its influence in global oil trade.
By finalizing this agreement, India and Russia demonstrate their ability to adapt to shifting geopolitical and economic landscapes. The partnership reflects their commitment to long-term collaboration and highlights the evolving dynamics of the international energy market.