US presidential candidate Donald Trump’s pledge to boost domestic oil production under his “drill baby drill” strategy has raised concerns about global oil markets and energy security. While lower oil prices could benefit India’s economy, the policy shift may also bring geopolitical and environmental challenges.
Global Oil Market and OPEC’s Role
The United States, the world’s largest oil producer, has the power to influence crude prices. Increased US oil output could flood the global market, driving prices lower. However, the Organization of the Petroleum Exporting Countries (OPEC) and OPEC+ (which includes Russia) have historically adjusted production to maintain price stability.
Experts believe that OPEC members, particularly Saudi Arabia, may cut production in response to higher US output to keep crude prices stable. Additionally, major US oil companies like ExxonMobil are skeptical about significantly ramping up production due to market uncertainties.
Impact on Russia and Energy Geopolitics
A decline in crude prices could weaken Russia’s economy, which heavily depends on oil and gas exports. With ongoing sanctions and its war in Ukraine, Russia relies on energy sales to fund its domestic and military expenditures.
However, the actual impact of Trump’s policies on Russia will depend on various factors, including global demand, OPEC’s response, and the effectiveness of Western sanctions.
India’s Energy Security and Oil Imports
India, the world’s third-largest crude importer, relies on foreign oil for nearly 88% of its needs. Recent geopolitical shifts have made Russia India’s top crude supplier, offering discounted rates due to sanctions.
- Key suppliers of India’s crude imports (2023-24):
- Russia: 33%
- Iraq: 21%
- Saudi Arabia: 16%
- UAE: 6.4%
- US: 3.6%
A drop in oil prices could reduce India’s import bill, easing fiscal pressure. However, overdependence on fossil fuels could delay India’s transition to renewable energy and affect its long-term energy security.
Challenges in India’s Energy Transition
While cheaper oil may provide short-term relief, India has committed to achieving net-zero emissions by 2070. The government has taken key steps to decarbonize its transport and energy sectors:
- Electric vehicle (EV) adoption: Sales grew from 1.53 million (2023) to 1.95 million (2024), reaching 7.44% of total vehicle sales.
- CNG and Biofuels: Greater penetration in transport to reduce oil dependency.
- Hydrogen fuel: Early-stage pilot projects to explore alternatives.
However, India faces hurdles in large-scale renewable energy adoption due to intermittent supply issues and dependence on critical minerals, mostly controlled by China.
Future Energy Strategy: Renewables & Nuclear Power
India aims to reduce fossil fuel dependency and increase nuclear energy production, targeting 100GW nuclear capacity by 2047. Unlike renewables, nuclear power provides a stable energy source, enhancing long-term energy security.
Conclusion: Limited Impact on India’s Energy Future
While Trump’s oil policies could bring short-term economic relief for India through lower crude prices, they also pose challenges to global climate goals and energy security. With India’s continued focus on decarbonization, the long-term impact of US oil production policies may remain limited.
