India has Russia over an oil barrel

“There’s a large volume of investment coming into the country because of the opportunities India can offer,” said Arvind Pangariya, professor of Indian political economy at Columbia University. “From Russia’s perspective the only issue is whether it is more constrained in its current account and needs to make payments elsewhere — in that case liquidity then becomes an issue.”

With Western sanctions and energy export restrictions weighing heavy on the Russian budget, having funds tied up in foreign currency and stuck in India is hardly a good outcome. Russia “constantly needs cash” said Alexandra Prokopenko, a nonresident scholar at the Carnegie Endowment for International Peace.

India is also earning an extra bonus as the crude it’s buying at knock-down prices from Russia is being refined in India and then diesel and other products are being sold to Europe and elsewhere.

India’s Prime Minister Narendra Modi | Ian Forsyth / Getty Images

“The Indian government is simply prioritizing India’s national interests,” said Anisree Suresh, a researcher at India’s Centre for Public Policy Research. “We have been getting oil with discounts of almost $35 per barrel to almost $20 per barrel in the last few months and, as one MP in the Indian parliament said recently, India was able to save almost $3.6 billion by importing crude oil from Russia.”

Although Ukraine is calling for Europe to stop buying refined oil products made with Russian crude, advocates of the policy say this is the way that the sanctions were designed — cutting Kremlin profits while not destabilizing global oil markets.

“By becoming a global provider of oil products, India has helped stabilize European markets as well,” said Suresh.