Moscow. The ongoing fierce conflict in the Middle East and the instability in the Strait of Hormuz have completely changed the equations of global energy security. The biggest impact of this geopolitical turmoil has been on India’s oil supply chain. Cheap Russian oil, which has been a problem solver for India for the last four years, has now started losing its shine. According to latest reports, the sanction discount available on Russian oil has now transformed into a scarcity premium i.e. a higher price for shortage. The situation is such that now India is getting Russian oil costlier than the international standard Brent crude.
This change is a sign of a serious economic crisis for India. After the Corona period, cheap Russian oil played an important role in handling the Indian economy and controlling the fiscal deficit. Now that Urals oil has crossed international rates and Brent crude itself has reached close to $ 92 per barrel, it will be a big challenge for the government to keep the prices of petrol and diesel stable in the domestic market. This situation is believed to have a direct impact on the value of the Indian rupee and inflation.
At the time of the start of Ukraine war in the year 2022, Russia was giving huge discount of 15 to 30 dollars per barrel to India, but for the delivery of March and April 2026, the market conditions have completely reversed. Now Russian oil is getting costlier than Brent crude by about $4-5 per barrel. The main reason behind this price increase is the oil coming from Gulf countries getting stuck on the way due to war. Due to disruption in the supply of about 14 lakh barrels of oil, Indian refineries are turning to Russia to meet their essential needs, taking advantage of which Russian exporters have increased the prices. In this entire incident, America’s contradictory oil diplomacy has also added fuel to the fire. America, which had earlier objected to India-Russia oil trade, is now requesting India to buy Russian oil to balance oil prices in the global market. As soon as there were signals that the West needed supplies of Russian oil, Russian exporters took advantage of the opportunity to raise rates sharply. Moreover, logistics and transportation problems have also caused the costs to skyrocket. Due to tension in the Middle East, ships have to take a long detour through the Cape of Good Hope, i.e. below Africa, due to which the cost of marine insurance and freight has increased manifold.