Imports of crude oil from Russia double in Apr-Sep

Informist, Friday, Nov 17, 2023

By Shubham Rana

NEW DELHI - India's love affair with discounted Russian crude oil continues to grow, with oil imports from the country nearly doubling year-on-year in the first six months of the financial year started April, latest commerce ministry data shows.

In Apr-Sep, Russia supplied crude oil worth $22.84 bln to India, 90.3% higher than the quantum of the year ago period. Of India's total crude oil import bill of $63.86 bln during Apr-Sep, Russia made for the biggest share, followed by Iraq and Saudi Arabia, respectively.

India has been filling up on Russian crude oil since early last year because of heavy discounts amid sanctions by western countries on the country after it invaded Ukraine in February 2022. The Group of Seven Developed Nations has imposed a $60 a barrel price cap on Russian crude. Under this, maritime and financial services entities are barred from facilitating seaborne Russian oil trades if crude oil is sold above the capped price.

Amid the sanctions, India continued to import crude oil from Russia, so much so that it has overtaken its traditional oil suppliers such as Iraq, and makes up for bulk of India's requirement. In the first six months of this financial year, Russia's share in India's total crude oil import bill was 35.8%, higher than the 14.5% level of Apr-Sep 2022 and 19.2% in 2022-23 (Apr-Mar). For perspective, prior to Russia's invasion of Ukraine, Russian cargoes comprised just around 2% of India's crude oil purchases.

After the US and China, India is world's largest importer and consumer of crude oil, and over 80% of its oil needs are met by imports.

Russia's crude oil supply to India continues to increase at a time when India's overall oil import bill is falling. In Apr-Sep, India's crude oil import bill was down 22.9% year-on-year, likely because of a fall in crude oil prices. Brent crude oil prices remained above $100 a barrel for a large part of Apr-Sep 2022, but have moderated since to a range of $71-$97 during Apr-Sep this year.

While Russia's oil supply to India continues to rise, traditional suppliers from west Asia are losing ground. Iraq's share in India's crude oil import bill fell to 20% in Apr-Sep from 22.7% a year ago, while Saudi Arabia's share decreased to 16.3% from 18.9%. The biggest loser has been the United Arab Emirates, whose share in India's crude import bill fell to 5.0% in Apr-Sep from 11.3% a year ago.

In fact, among India's top 10 oil suppliers, nine witnessed a year-on-year decline in their supply, in value terms, during Apr-Sep.

This boosted trade between India and Russia has benefitted both nations, with the former stocking up on cheaper fuel when global prices have been high and the latter finding a buyer for its crude oil amid sanctions from the western nations.

According to reports, Russia is currently supplying crude oil to Indian refiners at a discount of $8-$10 per barrel. Initially, after the outbreak of Russia-Ukraine war, India got Russian oil at a discount of around $30 a barrel, which narrowed down drastically to as low as $4 earlier this year.

With India's growth prospects looking good, its reliance on Russian crude is likely to continue as the government has said the country will buy oil from wherever it is cheaper. Earlier this month, Petroleum and Natural Gas Minister Hardeep Singh Puri had said India can restart big imports of crude oil from Venezuela, which recently saw easing of economic sanctions by the US, if the commodity is available at attractive prices.

Until Venezuela gets its act together and offers better and more viable deals, India is likely to continue to fan its love for Russian crude oil, and the big discounts attached to it. End

US$1 = 83.27 rupees

Edited by Ranjana Chauhan

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