Whenever there’s a major upheaval in the world, such as a war or tension, the first fear that grips us Indians is whether petrol and diesel prices will rise. This is because crude oil prices immediately skyrocket.
But a strange and positive thing has been happening lately. Despite the global tensions, crude oil prices haven’t risen as rapidly as expected. They’ve remained largely steady, hovering between $67 and $69 per barrel. And you might be surprised to know that India is the biggest hero behind this stability.
Let’s understand this whole story in very simple terms.
How India controlled oil inflation: This story begins with the Russia-Ukraine war. When this war broke out, many countries in the US and Europe imposed sanctions on Russia and almost stopped buying oil from it. Now Russia had plenty of oil, but fewer buyers. In such a situation, Russia started selling its oil at a huge discount.
This is where India played a very big and clever ‘mind game’.
India is one of the largest buyers of oil in the world. Our government clearly stated that our first priority is to ensure cheap oil for our citizens. We seized this opportunity and began purchasing large quantities of cheap oil from Russia (approximately 1.5 million barrels per day). This brought two major benefits to India:
Our own needs were met and we had to pay less for oil, which helped control inflation in the country.
When a major buyer like India started sourcing its oil from Russia, Saudi Arabia and other major oil-selling countries came under pressure.
What impact did this have on global prices?
This is the most interesting part. China, like India, also began buying oil heavily from Russia. When the world’s two largest buyers (India and China) switched to Russia, oil demand for the rest of the world did not increase as much. When demand did not surge, prices remained under control.
Simply put, India not only bought cheap oil for itself but also reduced excess demand for oil in the global market, thereby keeping a check on global prices.
The United States is also impressed by India
The United States is now praising India’s successful strategy. US Energy Secretary Chris Wright has described India as an “awesome ally” and said that he is a “huge admirer of India.” He acknowledged that India is a rapidly growing economy with significant energy needs, and that the United States wants to work with it.
India is no longer just a buyer of oil, but has become a major and savvy player in global energy politics, whose decisions impact the entire world.
