The oil conundrum: India's crude imports need a strategy, not just a discount

Question (10 marks, ~150 words):

'For an oil importer, how you buy is as important as how much.' In the light of India's rising dependence on Russian crude, examine the risks to India's energy security and suggest a diversified procurement strategy.

Introduction:

• India's oil receipts from Russia are back above 40% — a two-year high — even as the discount has narrowed and a premium has appeared, raising energy-security concerns for a country importing 85%+ of its crude.

The risks:

• Vanishing discount (value +83%, volume -2%) means paying more for less.
• Single-source concentration erodes bargaining power and resilience.
• Yuan-settled trade aids China; secondary-sanction and West Asia (Hormuz) risks threaten supply.

What changed:

• Until the Ukraine war ~70% of crude came via long-term contracts, mostly from West Asia — a buffer partly traded for spot bargains.

A diversified strategy:

• Rebuild a broad basket (West Asia, U.S., Africa, Latin America); balance long-term and spot; expand strategic petroleum reserves; accelerate renewables and domestic output.

Rajasthan relevance:

• Barmer oilfields and the HRRL refinery at Pachpadra strengthen domestic capacity.

Conclusion:

• Run oil procurement like a portfolio — energy security lies in the fewest single points of failure, not the biggest discount.