Donald Trump's impending tariff threats directed at nations purchasing Russian oil have extended beyond Washington. The recent gathering involving Vladimir Putin of Russia, Xi Jinping of China, and Narendra Modi of India represented a notable instance of unity, providing Putin with a chance to interact directly with the primary oil purchasers from his nation.

Both leaders of India and China have been attracted to Russian oil, which has become more affordable following the severance of trade relations with Moscow by Western nations due to its invasion of Ukraine in 2022.

Russia, China and India Share a Common Problem

However, the connections among Beijing, New Delhi, and Moscow have deepened. They now share a common problem in the US, which has enacted sanctions against Russia and imposed extensive tariffs on its trading allies.

India is currently facing some of the highest tariffs levied by Washington for purchasing oil from Russia. Meanwhile, China is still in discussions with the US to secure an agreement that would prevent severe tariffs and potential sanctions on its acquisition of Russian crude.

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The three leaders convened in Tianjin for the Shanghai Co-operation Organisation (SCO) summit. This regional platform sought to promote an alternative perspective to that of the West, which analysts have characterized as a challenge to American dominance.

Why Russian Oil?

Following the imposition of sanctions on Russia in December 2022, which included a price cap of $60 per barrel set by the G7, EU, and Australia, Russia sought to maintain its oil revenue by turning to nations such as India and China.

Both Russia and India Could Benefit from Eachother

At the height of the discount, Russian crude was available for purchase at almost $40 less than Brent prices. Gradually, this discount has diminished even more.

Russia depends on oil and gas exports for about a quarter of its budgetary revenues, which are financing its military expenditures, this is particularly crucial for India to ensure it does not withdraw due to pressure from the US.

 

Likewise, New Delhi provided Russia with a lifeline after a significant portion of the oil supplies affected by Western sanctions was redirected to India, which gained from lower energy prices.

India may now be poised to purchase even more oil from Russia, despite disapproval from Washington.

Therefore, Russia has the potential to enhance its business dealings with India and China, its primary trade partners.

Similarly, oil exports to India, which constituted merely a small portion of its imports prior to the Ukraine conflict, have surged to approximately $140 billion (£103.5 billion) since 2022.

Collectively, China and India account for the majority of Russia's energy exports.

Moreover, Modi recently reaffirmed relations with Moscow, informing Putin that their nations "have walked together shoulder to shoulder". Officials in New Delhi have also indicated that they will procure energy from sources offering "the best deal".

India and Russia Go Way Back

India's energy policy has experienced a significant shift in the past three years, positioning Russia as a central figure in its crude oil imports. Prior to the Russia-Ukraine conflict, India's crude oil imports from Russia constituted only 0.2 percent. However, in a few short years, Russian oil has risen to become the primary source for India.

During the Cold War era, India embraced a non-alignment strategy, yet it did not support Western initiatives aimed at countering Soviet-led communism. This stance fostered a diplomatic relationship with Moscow characterized by extensive arms transfers, technology exchange, and diplomatic backing.

Even following the dissolution of the Soviet Union, Russia has continued to be India's most prominent arms supplier. A significant portion of India's military assets -- particularly within the Navy and Air Force -- are either manufactured in Russia or incorporate Russian components.

India was previously a significant buyer of oil from the Middle East; however, it shifted to purchasing discounted crude from Russia after Western sanctions were enacted against Moscow in response to the invasion of Ukraine in 2022.

As a result, Indian refiners have benefited from reduced expenses due to the lower prices of Russian oil compared to Middle Eastern options.

China, which has also increased its oil imports from Russia, will be keen to protect its energy interests as the leaders convened at the summit.

China’s Slice of the Potential Deal

In addition to trade, it can be said that the primary objective for China, showcased at the SCO summit, is to demonstrate its capability as a formidable alternative to the US, particularly in light of recent policy changes implemented by Trump. During the forum, China aligned itself with nations such as Pakistan, Myanmar, and Sri Lanka, all of which have been adversely affected by Trump's tariffs. Historically, China has expressed a commitment to fostering a 'multi-polar' world order, which denotes a framework where power is shared among multiple significant entities. 

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Overall Trump’s Tariff Impositions Brought the Three Leaders Together

Trump's threat of tariffs may have been intended to coerce India into ceasing its purchases of Russian oil; however, it has inadvertently brought India closer to both China and Russia. This action is fortifying BRICS. With enhanced trade relationships, access to essential resources in China, and an expanding consumer market, India is not becoming weaker but rather stronger in an evolving global order. In summary, it can be concluded that the economic challenges posed by US tariffs have united three nations whose economic relationships have been historically strained by geopolitical conflicts.