Why in the News
India’s crude oil imports from Russia fell to a 44 month low in January 2026, while imports from Gulf countries and the United States increased. This shift comes amid West Asia conflict and rising global oil prices.
Key Data Points
- Russian oil imports in Jan 2026: 1.98 billion dollars.
- Russia’s share: 19.3% of total imports.
- Two months earlier: 27.5%.
- May 2025: 33%.
- Lowest Russian share since December 2022.
Rising Share of Other Suppliers
- Gulf Countries:
- Iraq: 16.6%,
- Saudi Arabia: 17.5% highest since April 2023
- UAE: 10.4%
- Kuwait: 6.1%
- United States: Share increased to 6.8% from 5% a year earlier.
Why the Shift Happened
- U.S. had linked tariff relief to reduction in Russian oil purchases.
- U.S. President Donald Trump removed penal tariffs citing India’s commitment to reduce Russian imports.
- Later, U.S. Supreme Court struck down the tariff mechanism.
Why It May Become Costly
1. Rising Oil Prices
- West Asia conflict pushed crude above 80 dollars per barrel.
- Every 1 dollar increase adds about 2 billion dollars to India’s annual import bill.
2. Strait of Hormuz Risk
- Strait of Hormuz is critical for Gulf oil supplies.
- Closure or disruption threatens Iraqi, Saudi, UAE and Kuwaiti exports.
3. Higher Freight Costs
- U.S. oil travels longer distances.
- Higher marine insurance and logistics costs during conflict.
Strategic Implications
- Energy security becomes more vulnerable.
- Trade deficit pressure likely if prices stay elevated.
- Rupee may face depreciation risk.
- Inflationary impact on domestic economy.
Prelims Pointers
- India imports over 85% of its crude oil needs.
- Strait of Hormuz connects Persian Gulf to Arabian Sea.
- Oil price rise affects Current Account Deficit.
- Diversification of suppliers is a key energy security strategy.
| [2020] The term ‘West Texas Intermediate’ sometimes found in news, refers to a grade of
(a) Crude oil (b) Bullion (c) Rare earth elements (d) Uranium |
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