A favourable FTA for giving up Russian oil

India must make a virtue out of necessity by proposing that it will comply with US sanctions in exchange for the latter addressing its key strategic interests

- Happymon Jacob

he American decision on October 22 to blacklist Russia’s energy giants Rosneft and Lukoil marks a significant escalation in economic sanctions targeted at Russia, as these two companies together account for 57% of Russia's crude oil output and export revenue.

While smaller Russian firms, responsible for the remaining 43%, remain unsanctioned by the US for now, the impact of this move is profound for major oil purchasing countries such as India. Indian oil companies have already announced that they will cease purchasing Russian oil toavoid potential sanctions. This shift isespecially notable given that Russia’s share in India's crude imports surged from a mere 1% to an all-time high of 38% following the Ukraine war. While the Donald Trump administration claimed that India was indirectly supporting Putin’s war efforts by buying Russian oil, New Delhi’s stance was simply driven by the pursuit of affordable energy sourcesavailableat the time.

India faces a dilemma: Should it continue buying Russian oil one way or another, or cease its imports altogether? For sure, the US has no right to dictate how two sovereign nations conduct their bilateral trade. While Russian companies have been sanctioned by the US, Moscow has no intention of stopping its oil exports. It is for the importing countries, such as India and China, to decide whether they are willing to risk potential secondary sanctions from the US for doing business with the sanctioned Russian entities.