India and Russia have signed a $13 billion oil trade agreement, marking a turning point in their energy ties. Russia will supply 500,000 barrels of oil daily to India’s Reliance Industries. The agreement strengthens India’s role as the largest importer of Russian crude.
India and Russia have signed their largest-ever oil trade deal, solidifying their growing energy partnership. Under the agreement, Russia’s state-owned oil company Rosneft will supply 500,000 barrels of crude oil daily to Indian refiner Reliance Industries, valued at $13 billion annually based on current prices. The deal is set to begin in January.
Strengthening Energy Ties Between India and Russia
This deal marks a significant milestone in the relationship between India and Russia, becoming the largest oil trade agreement between the two nations. The contract also includes an option to extend the partnership for another decade, ensuring long-term collaboration.
In the wake of Western sanctions following its invasion of Ukraine, Russia has shifted its focus toward countries like India and China to maintain oil exports. These sanctions have led Russia to sell oil at discounted rates, giving India the opportunity to secure cheaper crude.
Strategic and Economic Implications
This agreement accounts for 0.5% of the global oil supply, with a total annual value of $13 billion. Rosneft has yet to comment publicly on the deal, while Reliance Industries confirmed its ongoing work with multiple international suppliers, including Russian companies, but withheld further details due to confidentiality agreements.
Sources revealed that Rosneft’s board approved the deal in November, and the announcement aligns with Russian President Vladimir Putin’s planned visit to India. This timing emphasizes the strategic and economic significance of the agreement.
India Becomes Largest Importer of Russian Oil
Russia now supplies more than one-third of India’s energy imports, making India the largest importer of Russian crude. Previously, the European Union held this position, but sanctions on Russia in 2022 have shifted this balance.
India’s ability to secure discounted Russian oil, priced $3 to $4 per barrel lower than alternatives, has allowed it to reduce its reliance on Middle Eastern suppliers such as Saudi Arabia. As one of the fastest-growing energy markets globally, India is poised to remain a major player in shaping the future of global oil trade.