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24x7Report > Blog > Finance > How Trump’s Pursuit of Cheap Oil Will Impact India’s Energy Security
Finance

How Trump’s Pursuit of Cheap Oil Will Impact India’s Energy Security

Last updated: 2025/02/13 at 9:28 PM
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How Trump’s Pursuit of Cheap Oil Will Impact India’s Energy Security
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To satisfy certainly one of his main electoral agendas of offering low-cost oil (“drill baby drill”), in his inaugural speech U.S. President Donald Trump argued for rising the home manufacturing of crude oil and using it to spur prosperity within the U.S. economic system.

His message of selling carbon-intensive fossil fuels is detrimental to international decarbonization initiatives and local weather change mitigation measures. 

Trump’s enchantment to U.S. oil producers to extract extra oil might have vital implications for the worldwide vitality market, together with Russia. The U.S., being the one largest oil-producing nation (it produced 19,358 thousand barrels per day in 2023 with a global share of 20.1 percent), has substantial energy to affect the worldwide oil market. The rise in U.S. oil manufacturing might result in a surge in international vitality provides, doubtlessly driving down costs. 

Nevertheless, as a manufacturing cartel, the Group of the Petroleum Exporting International locations (OPEC) with a world share of 35.3 % (in 2023) or OPEC+ (OPEC+Russia, Mexico and some others with a global share of 54 percent) has comparatively higher management over international oil manufacturing and costs.

Russian Oil

Any discount in crude oil costs within the international market is predicted to have an adversarial impression on the Russian economic system. It’s closely reliant on oil and gasoline exports particularly now that it’s at warfare with Ukraine. Russia’s economic system is constrained by a number of restrictive measures imposed by varied European nations and america. 

Decrease crude oil costs might scale back Russia’s income from vitality exports, doubtlessly affecting its skill to fund home applications and army expenditures. Nevertheless, the precise impression of Trump’s announcement on Russia will rely on different elements as effectively. These embody the worldwide demand for oil and different sources of vitality, the response of different energy-producing nations (particularly OPEC), the response of U.S. home producers, and the effectiveness of assorted vitality sanctions on Russia.

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OPEC and Value Stability

Alternatively, this announcement is unlikely to have any vital impression on OPEC’s oil manufacturing choices and pricing methods. 

Traditionally, as a cartel, OPEC has normally adjusted its manufacturing ranges to take care of crude costs and stabilize the worldwide crude market. Thus, it’s doubtless that OPEC members will proceed to face collectively and undertake applicable measures as a response to any unilateral modifications in U.S. oil manufacturing. 

In accordance with Gordon Kaufman, a petroleum trade knowledgeable on the Massachusetts Institute of Expertise, in case there is a rise in U.S. oil manufacturing, as a countermeasure, the OPEC members, particularly Saudi Arabia (which holds a 12 percent share in international crude extraction), might even reduce their own production to maintain international costs steady.  

Even Exxon, a significant U.S. oil and gasoline producer, doesn’t count on an precise ramp-up of oil manufacturing by U.S. firms in response to Trump’s insurance policies.

Affect on India

Despite being the third-largest crude oil importer (accounting for 10.3 % of worldwide crude imports in 2023), India is a value taker within the international crude market and has no management over crude costs. India’s sources of crude import are fairly diversified, however its import dependency for crude oil was as excessive as 88 percent in 2023-24.

On account of latest developments in international geopolitics (disturbances within the Center East and the Russia-Ukraine warfare), Russia has turn out to be a significant supply of crude oil imports for India, with diminished imports from Center Japanese nations. 

In 2022, after Russia invaded Ukraine, the European Union imposed a value cap on crude imports from Russia. In response, Russia supplied a considerable low cost on its crude oil in comparison with international Brent crude costs. The discount on crude oil offered by Russia was as excessive as $15 to $20 per barrel (in comparison with the spot value).

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India has taken benefit of this, citing its unavoidable dependency on crude imports. In 2021-22 Russia’s place was ninth with a 2 % share in India’s crude imports. On account of big crude imports from Russia at a reduced value, Russia’s share elevated to 33 % in 2023-24, making it the biggest import supply for India adopted by Iraq (21 %), Saudi Arabia (16 %), the UAE (6.4 %) and the U.S. (3.6 percent). In 2023-24, crude oil imports ($139.3 billion) accounted for  21 percent of India’s total imports ($678.2 billion). 

Thus, a large portion of the Indian authorities expenditures go towards crude imports, not together with imports of assorted petroleum merchandise. Alternatively, the export of refined oil merchandise is a significant income earnings for India. In 2023-24, the total import of petroleum products (aside from crude imports) was value $23.3 billion (together with $10.5 billion of LPG) whereas exports amounted to $47.7 billion (together with $22.1 billion of high-speed diesel and $11.2 billion value of motor spirit).

Trump’s pursuit of low-cost oil might have each stimulating and adversarial implications for the Indian economic system. Any discount in international crude costs will definitely profit the Indian authorities’s exchequer and supply a better margin to home oil firms in India. 

Nevertheless, this clear promotion of a fossil fuel-driven financial progress technique by the U.S. president would pose vital challenges to India and different creating nations, that are most weak to the menace from local weather change and international warming. Furthermore, the U.S. withdrawal from the Paris Local weather Settlement beneath Trump 2.0 may even impression international initiatives for carbon neutrality.  

India is already experiencing varied adversarial results of local weather change similar to intensified excessive climate occasions and adversarial impacts on its agricultural productiveness and public well being. India had introduced its goal of attaining a internet zero emission goal by 2070 in COP26 and adopted varied measures to decarbonize its economic system, particularly the vitality sector.  

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The Indian economic system is closely depending on fossil fuels. The transport sector particularly relies upon considerably on imported crude oil and gasoline. Nevertheless, the latest progress of India towards decarbonizing its transport sector is spectacular. Electric vehicle (EV) sales in India elevated from 1.53 million models in 2023 to 1.95 million models in 2024 which was 7.44 % of the overall autos bought in 2024. Apart from EVs, rising penetration of compressed pure gasoline (CNG) within the transport sector, a mandate for biofuel mixing, and the introduction of hydrogen fueled autos (largely within the pilot stage) are different main steps towards decarbonization of the transport sector in India.

The main problem of decarbonization by renewable vitality in India is assembly giant vitality calls for with a dependable supply of vitality. Renewable vitality is characterised by intermittency of technology. 

Furthermore, the provision of essential minerals performs an essential function in renewable-based vitality applied sciences. The worldwide marketplace for essential minerals may be very concentrated and primarily dominated by China. Since India doesn’t have adequate essential minerals, its import dependency on China for essential minerals will pose a considerable problem to its vitality safety. 

Nevertheless, as indicated on this yr’s finances, India is focusing on 100 GW of nuclear capability by 2047. Not like renewables, nuclear vitality (with applicable security measures) as a non-fossil supply can present a dependable vitality provide and guarantee vitality safety. 

Trump’s “drill child drill,” due to this fact, is unlikely to have a lot of an impression on India’s vitality safety. 

Initially printed beneath Creative Commons by 360info™.

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TAGGED: Cheap, energy, Impact, Indias, Oil, pursuit, Security, Trumps

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