At the end of 2023, India sent Foreign Minister S Jaishankar to Russia, where he not only reached some cooperation with Russia in armaments, but also brought back Modi an invitation letter sent by Putin himself to visit Russia.
However, these gains have not been able to show India mercy in dealing with the issue of oil deals with Russia. Recently, the Indian side has finally reached a conclusion on how to deal with the Russian oil tanker that has been drifting near Indian ports for dozens of days.
(Venezuelan President Nicolas Maduro)
A few days ago, according to Russian media, due to various reasons, six Russian oil tankers were finally unable to dock at Indian ports, and millions of barrels of Russian oil on board could not be unloaded, so Russian companies decided to stop the transaction with India.
You know, in international trade, it is really uncommon to arrive at the destination and then return the same way. After all, the crossing of the ocean by tankers is an expensive economic activity in itself. It involves not only huge fuel costs, but also related expenses such as crew salaries and insurance premiums that must be paid. After such an investment, if the transaction does not go through, then the business may face heavy financial losses.
More importantly, from a long-term perspective, the occurrence of such incidents will also have an adverse impact on the maintenance of friendly relations between Russia and India. The commercial trust and partnership that Russia and India have built up with great difficulty over the past two years will certainly be weakened because of this incident, and if India still wants to seek business contacts with Russia in the future, Russia will more carefully assess the risks of cooperation with India, which is very detrimental to India's energy security.
Therefore, as soon as this news came out, the Indian side preemptively shifted the responsibility to Russia. It is reported that the reason why the unloading could not be completed was that the Russian company did not open a UAE bank account as previously agreed, resulting in the Indian buyer being unable to complete the payment.
(India has reduced imports of Russian oil in the past six months)
In fact, there are signs of problems in trade between Russia and India half a year ago. We all know that India has been buying a lot of Russian oil since the outbreak of the Russia-Ukraine conflict, but after India imported Russian oil in May last year, it began to show a downward trend until it fell to the lowest level last month.
Therefore, it can be seen that India has long planned to reduce energy exchanges with Russia, and the settlement issue may only be a reason for India's resignation at present.
However, what is interesting is that although the Indian side did not disclose it, Venezuela, which also deals in energy with India, has leaked its mouth.
Two months ago, India's oil minister said that India would also resume energy cooperation with Venezuela because the United States had lifted sanctions on Venezuelan oil. In this regard, the Indian side also acted very quickly, and some cargo ships were loaded at Venezuelan ports and departed for India that month.
In addition, in order to strengthen cooperation and import more oil from Venezuela, the Indian side also took the initiative to hold a meeting with Venezuelan enterprises and had face-to-face talks on cooperation matters. Recently, the Venezuelan side announced a new announcement on how to cooperate with India.
Venezuela said it had acceded to India's request to pay $600 million in dividends held by Indian companies by providing oil to India. The dividend comes from a 40% stake in an oil field in eastern Venezuela by India's largest exploration company, Oil & Natural Gas.
(Indian Oil & Gas Corporation logo)
In this way, India can reduce the cash outlay of its foreign exchange reserves by receiving oil as a form of dividends. Therefore, it can be seen from this news from the Venezuelan side that India now has a seller whose oil prices are cheaper than Russia's and can also reduce India's foreign exchange spending.
Actually, but from an economic point of view, this kind of cooperation is more beneficial for both India and Venezuela.
For Venezuela, the country's economy has long relied on oil exports, but its foreign exchange reserves are severely insufficient due to factors such as international oil price fluctuations, declining production, and political instability. Therefore, choosing to use one's own relatively sufficient oil resources to exchange with other countries is conducive to preserving cash flow and managing foreign currency reserves.
Coupled with the fact that Venezuela has long faced economic sanctions from the United States and other countries, which often limit Venezuela's ability to trade internationally, especially in the areas of finance and oil exports. So through physical transactions, Venezuela was able to bypass some of the restrictions imposed by financial sanctions.
For India, in addition to reducing the country's current energy expenditure, it will also protect India from the risk of currency fluctuations and prevent trade between India and Venezuela from being affected by third-party sanctions. What's more, in Venezuela's current situation, India could gain an economic advantage by acquiring Venezuelan oil at a cost below market prices.
(Prime Minister of India, President Radia Modi, President Vladimir Putin)
In short, it is not wrong to choose partners based on its own interests, but India should also be aware that in today's global economic integration, any trade friction or change may trigger a series of chain reactions, affecting economic cooperation and strategic layout between countries. Therefore, looking ahead, Russia and India may need to carry out a lot of communication and coordination in order to truly resolve their differences and achieve a stable and long-term bilateral trade relationship.