The contradictions between Russia and India have intensified recently. Russia is very dissatisfied with some of India's moves and has also taken some countermeasures. It was at this time that Russia announced its economic results for 2023. At the end of 2023, Russia publicly announced that the growth rate of Russia's economy, during the year, reached at least 35%。
This number sounds very good, but in fact Russia is very unhappy. Because, in this year, Russia has faced severe sanctions from Western countries, which has caused a huge blow to Russia's economy. In particular, after Western countries imposed a price limit on Russia's oil exports, Russia's oil revenues have dropped significantly.
As a result, Russia has to turn to the Asian market and export a large number of **, refined oil and natural gas, as a way to reduce losses and maintain economic stability. In doing so, although it has allowed Russia's economy to grow somewhat, it has also come at a great cost. Because this means that Russia has to compete with some countries in Asia, and even cooperate. And these countries, including India.
The Indian rupee becomesA heavy burden on Russian oil **
In the Asian market, China and India are the two largest customers of Russian oil. Russia is very satisfied with China's cooperation, but it is full of complaints about India's approach.
Here's how it happened: since 2022, bilateral settlements of oil** between Russia and India have been in rubles and rupees. This approach was originally intended to avoid the impact of US dollar sanctions and protect the interests of both sides. However, with India's import needs far outstripping its export capacity, Russia cannot find enough goods and services in the Indian market to consume the rupees it earns. As a result, Russia has a large backlog of rupees, which have low liquidity and purchasing power on the international market, equivalent to a pile of waste paper.
If Russia can use these rupees effectively, or exchange them for other, more valuable currencies, then its economic situation will improve. It is estimated that Russia lost about $1 billion in revenue last year because of the rupee's problems, which is a very heavy blow for a country in a difficult situation. Therefore, it is not unreasonable to say that Russia's economy is being held back by India.
In order to get out of this dilemma, Russia announced that it will no longer accept the rupee as the settlement currency for oil**, but will instead recommend that India use the ruble or the yuan. Because the yuan is a more stable and internationally influential currency, and China is an important partner of Russia, Russia can use the yuan to buy various goods and services in China, thereby increasing its own income. It is also a way for Russia to express its dissatisfaction and warning against India.
Russia has rejected India's invitation to invest in favor of using the rupee to expand its own oil market
In the face of Russia's dissatisfaction, the Indian side put forward a plausible suggestion, that is, Russia could use the rupee in its hand to invest in India to obtain profits. In this way, India can not only buy Russian oil with rupees, but also attract Russian funds into its own economic construction, achieving a win-win situation.
However, Russia did not accept India's proposal and rejected such an invitation to invest. Russia believes that this proposal of India is playing with itself, wanting to exchange a low-value currency for a commodity of ** value, and then leave this currency in its own country, leaving Russia to bear the risks and losses. Russia does not want to be the wronged leader of India, nor does it want to be led by the nose by India.
However, Russia did not want to let its rupees go to waste, so it came up with a better way to use the rupee to expand its oil market in India. Russia has announced that Rosneft will build a new refinery in India to increase its competitiveness in the Indian market. Although Russia did not disclose the specific details of this project, some analysts believe that it is likely that Russia used the rupee in its hands to achieve it. In this way, Russia can not only consume the rupee, but also increase its own oil revenues, and also hit India's oil industry with one stone.
Russia's energy strategy: reduce oil production, increase natural gas production, and counterbalance the United States
Entering 2024, Russia's economy is expected to continue to maintain a high growth rate, and the energy business remains an important pillar of its economy. Russia has adopted different tactics in both oil and gas sectors to adapt to different situations.
In the oil sector, Russia has chosen to cooperate with OPEC and support the production cut agreement to stabilize international oil prices and protect its own earnings. Since 2016, Russia and OPEC have reached several agreements on production cuts, which have effectively curbed the volatility of oil prices. Russia also continued to cut production by 500,000 barrels per day during the quarter. It is also in response to pressure from the United States, which is the world's largest producer and consumer of oil, and its influence on oil prices and markets should not be underestimated.
In the field of natural gas, Russia has chosen a different strategy from OPEC, that is, increasing production and exports, in order to expand its market share and competitiveness. Russia has already announced that pipeline gas exports in 2024 will increase by 11% compared to the previous year, and exports of liquefied natural gas will also increase by 14%. This is to seize the growth of gas demand, especially in the European and Asian markets, but also to deal with US interference, which is also aggressively promoting its own LNG exports in an attempt to weaken Russia's influence in Europe.
It seems unlikely that the United States wants to completely limit Russia's energy development.
Kunpeng Project