US makes U-turn on India's purchase of oil from Russia

President Joe Biden’s administration has no plan to sanction India for continuing to buy oil from Russia defying the curbs the United States imposed on the former Soviet Union nation for its military aggression against Ukraine.

Two US diplomats subtly signalled a U-turn in the approach of Washington DC to New Delhi’s relations with Moscow – months after a senior official of the Biden Administration warned India of “consequences” if it continued to buy oil from Russia.

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“I want to be clear that we are not looking to sanction India, and our partnership with India is one of our most consequential relationships,” Karen Donfried, the US Assistant Secretary of State for European and Eurasian Affairs, said. “We do not believe that our policy – our sanctions policy in the energy space needs to have universal adherence in order to be effective and to achieve what I described as our two goals. So we are – we are comfortable with the approach that India has taken,” Geoffrey R Pyatt, US Assistant Secretary of State for Energy Resources, added.

The two senior US diplomats were responding to questions from journalists on the Biden Administration’s views on India’s continued purchase of oil from Russia even after several western nations imposed sanctions on the former Soviet Union nation after it launched “special military operations” in Ukraine.

The comments by the two senior US diplomats signalled a subtle change in the approach of the Biden Administration.

The US Secretary of Commerce Gina Raimondo had said in Washington D.C. in March 2022 that India's move to buy discounted crude oil from sanction-hit Russia and to work out an alternative payment mechanism to bypass restrictions imposed by the western nations on transactions with President Vladimir Putin's nation was “deeply disappointing”. Daleep Singh, the US President's Deputy National Security Advisor on International Economics, had said in New Delhi around the same time that the nations trying to circumvent the restrictions the US had imposed on transactions with banks in Russia would face “consequences”. He had also said that the US would not like to see rapid acceleration of India's imports from Russia, be it energy or any other commodities.

India, however, continued to buy oil from Russia, notwithstanding tough talks by the US and other western nations.

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Russia overtook Iraq in November 2022 to be the largest oil supplier to India.

India’s imports of crude oil from Russia purportedly went up to 1.2 million barrels per day (bpd) in December 2022.

“We see the price cap and the implementation of the price cap as an opportunity for countries like India,” said Pyatt.

The G7 nations, the European Union and Australia agreed on December 5 last agreed to impose a price cap of $60 per barrel on oil from Russia.

“So even though India is not a participant in the price cap coalition, India has effectively used its negotiating leverage, which it derives from the price cap and the fact that large portions of the global markets are no longer accessible to Russia, to drive down the price that it pays for Russian crude,” Pyatt said, adding: “That is a – that’s a benefit to India, it’s a benefit to the Indian economy, but it also helps to advance our two goals of stabilizing global markets and denying resources to the Kremlin.”