Relevance: GS II (International Relations) & GS III (Energy Security) | Source: The Indian Express

1. The Core Issue: What has happened?

• The United States had given a temporary permission (a “sanctions waiver”) allowing countries to buy Russian oil without being punished. This waiver has now officially expired.
• Why was it given earlier? Due to the war in West Asia, the global oil supply was disturbed. The US temporarily allowed Russian oil into the market to prevent global petrol prices from shooting up right before the American domestic elections.
• The Backlash: Western critics argued that this temporary permission allowed Russia to make huge profits, which undermined the efforts to stop the Ukraine war.

2. India’s Strategic Move (Protecting National Interest)

• India relies heavily on foreign countries for its energy, importing about 88% of its daily oil needs.
• Cashing in on the Opportunity: During this temporary waiver period, India smartly bought massive amounts of cheap Russian oil directly from major Russian companies.
• Why not buy from the Middle East? Because of the ongoing war in West Asia, the traditional Middle East oil route (via the Strait of Hormuz) is highly risky and expensive. Buying discounted Russian oil is a non-negotiable need for India to prevent severe “imported inflation” (high fuel prices) for the common citizen.

3. The Way Forward: How will India manage now?

• Even though the official US permission is over, Indian refiners will not stop buying Russian oil. They will simply change how they buy it:
• The “Middleman” Route: Indian companies will stop buying directly from the big, sanctioned Russian giants. Instead, they will quietly buy oil through a network of small, unknown private traders or “intermediaries.”
• The Real Threat (Secondary Sanctions): The biggest risk for India’s administration now is if the US decides to apply Secondary Sanctions. This means the US could strictly punish Indian banks and companies just for doing business with these middlemen.

UPSC Value Box: Important Administrative Terms

MCQ

Q. With reference to global energy security and India’s strategic petroleum imports, consider the following statements:

1. Secondary sanctions are financial penalties imposed by a country on third-party foreign entities for conducting business with a sanctioned nation.
2. India’s Strategic Petroleum Reserves (SPR) are primarily located in Visakhapatnam, Mangaluru, and Padur.
3. The G7 price cap on Russian crude oil is an official, binding mechanism administered globally by the World Trade Organization (WTO).

Which of the statements given above is/are correct?

• (a) 1 and 2 only
• (b) 2 and 3 only
• (c) 1 and 3 only
• (d) 1, 2 and 3

Correct Answer: (a)