India’s tensions rises as Russia hikes oil prices, Putin to now charge…

The ongoing war in the Middle East and the blockade of Hormuz have dashed India’s golden era of “cheap Russian oil.” Instead of offering discounts, Russia is now exploiting India’s compulsion to charge a “premium.”

Iran-Israel war: India tension's rises as Russia hikes oil prices, Putin to now charge... — Iran-Israel war: India tension’s rises as Russia hikes oil prices, Putin to now charge…

The war in the Middle East and the turmoil in the Strait of Hormuz have weakened India’s long-standing oil supply lines. Meanwhile, reports of Russian oil are emerging that are nothing short of a major setback. Russian oil, which has been cheap for India for the past four years, has now become more expensive. The “sanction discount” on Russian oil has now become a “scarcity premium,” meaning a scarcity price. India is now purchasing Russian oil at a higher price than the international benchmark, Brent crude.

Russia was offering India a discount of $15 to $30 per barrel after the Ukraine war began in 2022. But now the market has turned. Amid the ongoing war with Iran and escalating tensions in the Middle East, the US Treasury Department issued a 30-day waiver on Thursday, allowing India to buy Russian oil currently stuck at sea, as reported by Reuters. In other words, the Trump-led United States has allowed India to continue purchasing Russian oil. The move is aimed at ensuring a steady flow of oil in the global market.

The deal has become expensive

Russian oil for delivery in March and April 2026 is now available at $4-5 per barrel more expensive than Brent crude.

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1.4 million barrels of oil from the Gulf are stuck in transit due to the war. As a result, Indian refineries (IOC, BPCL) are turning to Russia to meet their needs, and Russia is taking full advantage of this opportunity.

Once again, US is responsible for all this. First, it interfered with India-Russia oil trade, and now it is pleading with India to buy Russian oil to reduce oil prices. This shoddy US oil diplomacy has given Russia a golden opportunity to raise oil prices.

As soon as the US urged India to buy Russian oil, Russian exporters raised prices further. They know that amid the Middle East crisis, the world has no other option but to source oil from Russia.

Long sea journey and heavy expenses

Even though oil may be a little cheaper at Russia’s Baltic ports, its price skyrockets by the time it reaches India.

Long journey: Due to the war in the Middle East, ships have to take a long detour via the ‘Cape of Good Hope’ i.e. under Africa.
Insurance and freight: Marine insurance and freight costs have risen so much that by the time oil reaches the west coast of India, its final price exceeds global market rates.

India’s difficulties increased

This change has brought a major economic crisis for India, because after Corona, ‘cheap Russian oil’ had played the biggest role in managing the country’s economy and reducing the deficit. Now that Russia’s Urals oil has become costlier than the international rate and Brent crude itself has reached close to $92 per barrel, the pressure on petrol-diesel prices and the Indian rupee in the domestic market has increased significantly.

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