Washington’s policy gamble could push geoeconomics into a tailspin.

Oil supplies have become more uncertain than before. Oil prices are on a steady rise. Supplies from the rest of the Gulf region, Africa, and Latin America alone would not suffice for the growing consumers of Asia.

China, which is also facing the 100% tariff threat, may retaliate. Instead of diplomatic solutions, the Trump administration is creating an artificial crisis.

India-US Friction

The India-US ties have come of age. People-to-people ties are extraordinary, and business ties expand with every passing year.

But India has no plans to become a treaty ally of the US, and Washington must understand how Delhi functions: strategic partnership does not translate into a treaty alliance.

A transactional US and an India that believes in strategic autonomy differ on certain geopolitical fronts: New Delhi and Washington have historically differed over respective interests on Russia. Delhi has withstood immense pressure to safeguard its ties with Moscow, and any diktat to reduce its sovereign choices – imports of crude – could further erode the India-US partnership, which, under Trump 2.0, is rocked by tariffs and the West Asia crisis.

Further, the alleged role of the US-backed forces in unseating the Sheikh Hasina government has left a bad taste. Historically, the State Department and India’s Ministry of External Affairs have had sharp differences over dispensation in Dhaka. India, like any country, has favoured governments in the neighbourhood that serve its security interests.      

India-Russia Strategic Partnership 

The defence industry partnership between India and the erstwhile Soviet Union, and now Russia, is exemplary. India-Russia ties have remained resilient despite major shifts in the international order. In fact, it is one of the most steady partnerships between any two countries in the post-WWII period. No other country (except France) has made defence technology transfers to India like Russia.

While joint projects under Make in India with technology transfer are the focus, sincere attempts are being made to revive industrial cooperation through joint projects. An evolving area of focus is high-tech and artificial intelligence (AI) solutions. Energy partnership, both in traditional domains and civil nuclear energy, is a major pillar.

What was unthinkable half a decade back is now a reality. Russia has been India’s major oil supplier since the Ukraine war, offering discounted crude that stabilised prices, including globally, benefiting Indian consumers. The oil trade was augmented by the strain in energy supply due to the ongoing West Asia crisis.

Why Moscow Matters

Indian public sector undertakings (PSUs) have invested over US$10 billion in major Russian upstream oil and gas assets. India will be the first-ever official partner country of the Russian Energy Week International Forum scheduled to be held in Moscow from October 14-16. The Federation of Indian Petroleum Industry (FIPI) will represent the Indian Ministry of Petroleum and Natural Gas at the international forum.

In the words of Russian Deputy Prime Minister Alexander Novak, "Russia is interested in attracting Indian investment to the Russian oil and gas sector, as well as in developing a distribution network with the participation of Russian companies in India. Relations between the two countries have the nature of a strategic partnership, and their leaders are in constant contact. Mutually beneficial cooperation in oil and gas projects is promoted actively."

Therefore, India should conclude a long-term oil supply agreement with Moscow to ensure competitive prices and long-term supplies.

Energy Safety Net

It is not Russia alone that meets India’s growing energy needs. While Saudi Arabian crude exports face delays and India continues to have supplies of Russian crude, the focus is on increasing oil supplies from African, Latin American, and Eurasian partners despite the challenges. Prime Minister Narendra Modi’s proposed visit to Canada in December is poised to expedite energy partnerships. Indian oil giants need to invest in and acquire assets in the oil-rich states of South America, Africa, and Central Asia.

Diversification should be pursued with long-term interests.

India’s requirements are huge. Sources are limited. Therefore, the strategy must be pragmatic and sovereign rather than subservient.   

(The writer is a commentator on geopolitics and geoeconomics. Views expressed are personal.)