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In this piece, Yves introduces Simon Watkins, who occasionally contributes to our platform despite the strong neoconservative bias present in his writing. Readers might find some of his viewpoints contentious, particularly his underlying belief that the U.S. has a good chance of persuading India to cease purchasing Russian oil—not by emphasizing Russia as a threat, but by preventing India from reconciling with China.
This article sadly reflects the persistent belief among many in the U.S. that it can dictate the economic and trade relationships of nations like India, treating it as an equal while attempting to exert control over its choices. Such an approach is reminiscent of abusive relationships, where one partner inflicts harm yet expects the other to act as though nothing is amiss.
By Simon Watkins, a former senior FX trader and salesman, financial journalist, and best-selling author. He was Head of Forex Institutional Sales and Trading for Credit Lyonnais and later held the position of Director of Forex at Bank of Montreal. Watkins also served as Head of Weekly Publications and Chief Writer for Business Monitor International, Head of Fuel Oil Products for Platts, and Global Managing Editor of Research for Renaissance Capital in Moscow. He has published extensively on topics such as oil and gas, Forex, equities, bonds, economics, and geopolitics in numerous leading publications. Additionally, he has acted as a geopolitical risk consultant for several major hedge funds across London, Moscow, and Dubai. Originally published at OilPrice.
- U.S. President Donald Trump has doubled tariffs on Indian goods to 50% while also offering expanded U.S. oil and gas supplies to India as part of a broad strategic proposal.
- This initiative continues the U.S.–India Comprehensive Global Strategic Partnership, which encompasses defense co-production and technology collaboration, aiming to increase bilateral trade to $500 billion by 2030.
- While Washington seeks to align India against both Russia and China, India remains cautious and measured in its approach.
At the heart of President Trump’s financial strategy to address Russia’s war in Ukraine is the plan to diminish its oil and gas revenue. Following the Russian invasion on February 24, 2022, the focus was on deterring Europe—particularly Germany, as its primary economic engine—from importing cheap Russian energy.
These efforts saw initial success, with Europe now pressured to eliminate such imports swiftly. Consequently, the U.S. has presented itself as a key supplier of alternative gas and oil to replace Russian resources.
Recently, U.S. Energy Secretary Chris Wright extended a similar offer to India, suggesting American energy supplies could replace Russian imports. This overture followed the doubling of tariffs on Indian goods on August 27 due to India’s ongoing purchases of Russian oil and gas. Trump has hinted at accelerating the broad agreements reached in February between the two nations as an additional incentive for India to comply. But will India ultimately halt Russian oil and gas purchases, thus compelling Moscow to engage in negotiations over Ukraine?
One aspect that has resonated well with Europe regarding Trump’s strategy on Russia-Ukraine is the absurdity of European nations continuing to fund Russia amid its military aggression. Moscow’s war machine, supported by these energy imports, could very well pose a threat to Europe itself if left unchecked.
However, India does not view Russia as an immediate threat. In fact, the bilateral relationship has fostered good ties over the decades. Historically, India depended on Russian arms and affordable energy, solidified by a series of significant deals made in December 2021, much to the surprise of President Biden. Notably, these agreements included enhanced energy cooperation, with Russian company Rosneft supplying Indian Oil with nearly 15 million barrels of crude oil by the end of 2022. This agreement represented just one of 28 collaborations initiated during President Putin’s visit to Prime Minister Modi, spanning areas such as military cooperation, petrochemicals, and more.
As a result, India’s importation of oil, gas, and defense resources from Russia isn’t a new phenomenon, though recent global events may have prompted a more assertive response from Washington. For example, Indian troops participated in the Russian-led ‘Zapad’ military exercises in September, which raised concerns given their inclusion of tactical nuclear weapon rehearsals. Additionally, these drills featured Iranian military personnel, corresponding with a burgeoning 20-year strategic cooperation agreement between Russia and Iran that replaced an earlier pact.
Although Russia poses no direct threat, the dynamics with China present a different reality. Part of the U.S.’s long-term strategy is to leverage India’s anxieties regarding China to fortify India’s position as a regional counterbalance. This objective was underscored following the June 15, 2020, skirmish in the Galwan Valley between Chinese and Indian forces, which illustrated India’s growing resistance to China’s expanding sphere of influence through initiatives such as the Belt and Road Initiative (BRI).
For India to enhance its stance against China, it needs reliable energy sources, as it possesses limited domestic oil and gas reserves. The International Energy Agency (IEA) projects that India will account for 25% of the global increase in energy demand over the next two decades, potentially surpassing the European Union as the third-largest energy consumer by 2030. This necessitated establishing India as a strategic counterweight to China while simultaneously nurturing partnerships to secure energy supplies from the UAE, despite the limitations of that region in meeting all of India’s future energy needs without Russian resources.
To counteract the extensive cooperation between India and Russia, the U.S. has bolstered its energy offerings through the China-U.S. Comprehensive Global Strategic Partnership plan, first outlined during February meetings between Trump and Modi. A significant component of this strategy is the launch of the ‘U.S.-India COMPACT’ initiative, focusing on military partnerships and enhanced economic ties. As part of this initiative, both nations aim to double bilateral trade to $500 billion by 2030, an ambitious target that will require concerted efforts from both sides to achieve.
