China’s growing imports of Iranian oil is one reason why India has not followed Western sanctions on Russian crude, more than tripling imports in recent months.
An analysis published by Reuters on Friday quotes Indian officials who said, “New Delhi wants to avoid repeating what it sees as the mistakes of the past: abiding by sanctions on Iran and winding down oil imports, only to see its main regional rival China continue unpunished and benefit economically.”
The result has been a huge leap in volumes from Russia. In May, India imported 819,000 barrels per day (bpd), from 277,000 bpd in April and 33,000 bpd a year ago. Russia is now the second biggest supplier to India, replacing Saudi Arabia, while Iraq continues to be the largest.
India abided by US sanctions when former US president Donald Trump withdrew from the 2015 nuclear agreement known as JCPOA and gradually imposed full oil export sanctions on Iran. But China continued buying small volumes until November 2020 when it began noticeably increasing imports of illicit Iranian shipments.
China has kept up larger Iranian oil imports and is now buying massive amounts of Russian oil at discount prices. According to various estimates Tehran is exporting around 750,000 barrels per day and China is by far the largest buyer.
The Biden Administration, which decided early on to start talks with Tehran to revive the JCPOA, has failed to put effective pressure on China to stop imports of Iranian crude, which also come with a discount.
This has convinced India not to join Western sanctions against Russia, seeing itself shortchanged by abiding with US sanctions on Iran, while its rival is getting cheap oil.
"India has the attitude that if China is buying, why wouldn't we?" Robin Mills, chief executive of energy consultancy Qamar Energy told Reuters.
"India doesn't want to be in the same position again when China continued to buy Iranian oil and India stopped it."
Last month, Indian Foreign Minister Subrahmanyam Jaishankar posed the question at a conference: "Why are Indian money and funds coming from India seen as funding the war (in Ukraine), when Europe also buys gas from Russia?"
Referring to US sanctions on Iranian and Venezuelan crude, he said: "They (Europe and the US) have squeezed every other source of oil we have and then say you will not go to the market and get the best deal for the people; it's not a fair approach".
That all means New Delhi is reluctant to put US interests ahead of those of Russia, especially after it felt it was harmed economically by sanctions on oil from Iran and Venezuela.
Under Modi's nationalist government, India has pursued an assertive foreign policy, standing up to China in a two-year military border standoff and rejecting Western criticism of domestic policies some say are authoritarian and divisive.
Indian officials counter that what refiners are doing is legal and some European countries are still buying Russian oil and gas. Executives at state-owned and private refineries do not expect purchases of Russian crude to slow any time soon, the report said.
The United States has offered to sell more defense equipment and oil to India, for example, and New Delhi joined a U.S.-led trade partnership Indo-Pacific Economic Framework for Prosperity.
India is a member of the Quad alliance, which links it with the United States, Japan and Australia. India also signed a free trade agreement with Australia, talks for which initially began in 2011.
With reporting by Reuters