US President Donald Trump’s recent visit to Beijing has highlighted a striking asymmetry in Washington’s approach to Russian energy. One issue the US has relentlessly pressed with India — the purchase of Russian crude — was conspicuously absent in its engagement with China, even though Beijing imports far larger volumes of Russian energy. India, by contrast, saw the US waiver permitting its refiners to source crude from designated Russian entities expire this weekend. Washington chose not to renew it despite being aware of the stress this could impose on ordinary Indians.
Unilateral coercive measures are unjustifiable, and letting the waiver lapse risks harming bilateral ties and eroding goodwill for Washington across India. It also undermines claims of a comprehensive India-US strategic partnership. More broadly, this asymmetry reflects a deeper structural shift — from markets largely determining trade flows to one where geopolitical considerations increasingly shape them.
The post-war trading system rested for decades on the rhetoric of free trade: that markets allocate resources more efficiently than governments and prosperity grows when countries trade according to comparative advantage. The West argued that state intervention in trade should be minimised, tariffs cut and supply chains allowed to evolve according to price signals. Developing economies were urged — often pressured — to liberalise on the premise that economics should trump politics.
As the distribution of global economic power shifted and emerging economies became more competitive, the discourse evolved. “Free trade" gave way to “fair trade", a framework under which market access became conditioned on labour standards, environmental conditionalities and governance norms. While sometimes legitimate, these functioned as non-tariff barriers, raising production costs for lower-income competitors just when western competitiveness was eroding. They appeared as attempts to alter comparative advantage by imposing advanced-economy cost structures on developing ones.
A third phase is emerging: what could be called “forced trade" — the use of sanctions, financial leverage and secondary coercion to shape the trading choices of sovereign states. US sanctions-related waivers on oil purchases from Russian entities Rosneft and Lukoil are illustrative. The issue is whether a country can compel third countries to reorder their trade flows under the threat of unilateral secondary sanctions.
This departs from the principles that once underpinned the “liberal" trading order. Energy markets function best when buyers optimise according to price, logistics and security of supply. Sanctions distort these calculations by inserting geopolitical preferences into commercial decisions. Artificially constraining access to competitively priced suppliers raises import costs for energy-deficit economies, fuels inflation and imposes welfare losses on consumers.
The implications of this shift are being felt by countries like India, where energy security is inseparable from economic stability and household welfare. Prime Minister Narendra Modi’s recent appeal to Indians to moderate fuel consumption, foreign travel and gold purchases reflects an uncomfortable reality. Disruptions in the Strait of Hormuz have exposed the vulnerability of an economy that imports nearly 87% of its crude oil requirements, even as parts of India face heatwaves that are expected to raise energy demand. An equally significant chokepoint lies in the growing use of punitive sanctions that shape the commercial choices of third countries.
When Indian refiners turned to Russian crude in 2022, the rationale was straightforward. Russian Urals traded at a substantial discount to Brent because western sanctions had narrowed Moscow’s customer base. For inflation-sensitive India, commercial logic aligned with national interest. Discounted Russian crude moderated our import bill, reduced dependence on Gulf suppliers and improved refining margins.
That arithmetic has changed. Discounts on Russian crude have narrowed and sanctions on Rosneft and Lukoil have increased banking complexity and transactional risk. Instability in West Asia has complicated the supply picture. Yet the rationale for diversification remains. India cannot place excessive dependence on any one supplier, particularly when energy markets are shaped by geopolitical disruptions.
What remains unchanged is a fundamental proposition: India’s energy security cannot be negotiated on the basis of external pressures when core national interests are engaged. Decisions on oil purchases must be driven by price, grade, availability, reliability, payment arrangements and security of supply, not by what foreign capitals want. A strong and secure India cannot serve as anyone’s camp follower.
Holding to principle, however, is not the same as ignoring altered circumstances. Energy policy responds to commercial realities. If price advantages of Russian crude no longer compensate for the complexity of sanctioned-entity transactions and risks, Indian refiners will naturally reduce purchases from those entities. Crude grades that become more attractive on a delivered-cost basis will gain share. This is not yielding to pressure but commercial discipline within the frame of national interest.
There is no compelling evidence that sanctions achieve their objectives. Markets adapt: trade diverts, commodities reroute, shadow fleet proliferate and alternative payment systems evolve. Coercive measures increase transaction costs and reduce transparency.
Forced trade has systemic implications too. It is the toolkit of powers that retain the capacity to punish but no longer command consent. When such states weaponise interdependence — through sanctions, export controls or financial restrictions — firms and governments respond by diversifying suppliers, payment systems and trading arrangements, fragmenting markets. In the longer term, forced trade risks undermining precisely the liberal order that western nations once claimed to champion.
The burden of such measures is also unevenly distributed. Wealthier economies imposing sanctions possess diversified energy options and fiscal cushions. Developing countries do not. In India, rising externally driven energy costs ripple through the economy, fuelling inflation, straining public finances and raising the cost of living. The costs fall hardest on the poorest.
There are legal implications too. Extraterritorial sanctions applied to third-country entities are inconsistent with principles of sovereign equality and non-interference, particularly in the absence of UN backing. For many in the Global South, this appears less like principled statecraft than selective enforcement by economically dominant actors.
None of this suggests India should ignore the changing realities. Russian crude was the right call in 2022 because the economics justified it. It remains part of the answer today, in calibrated volumes from select suppliers. Tomorrow, the arithmetic may change again and India should adapt accordingly.
But that adaptation must remain India’s sovereign choice, guided by what serves Indian interests. The frame remains the same: national interest paramount, diversification ongoing, external pressures or threats irrelevant. That is the discipline strategic autonomy requires — and one India will need to exercise even more as a forced trade era shaped by geopolitical coercion deepens, a trend the Global South should resist normalising.
Views are personal