India’s import of Russian oil has reached unprecedented levels, surpassing the combined oil purchases from Saudi Arabia, Iraq, the UAE, and the US.
India imported 1.96 million barrels per day from Russia in May alone, marking a 15 percent increase from the previous high in April. These statistics, obtained from energy cargo tracker Vortexa, highlight Russia’s rising dominance in India’s crude oil market, constituting almost 42 percent of all oil imported that month.
The surge in Russia’s share came at the expense of traditional Middle Eastern suppliers. Shipments from Saudi Arabia dropped to their lowest level since February 2021, totaling 560,000 tonnes. The Organization of the Petroleum Exporting Countries (OPEC) also witnessed a decline, with its share in India’s oil imports reaching an all-time low of 39 percent in May. Previously, OPEC, primarily comprising countries from the Middle East and Africa, accounted for up to 90 percent of India’s crude oil imports. However, the availability of discounted Russian oil following Moscow’s invasion of Ukraine in February last year prompted a shift in India’s import sources.
For the eighth consecutive month, Russia emerged as the largest single supplier of crude oil to India. The country has now surpassed the combined purchases from Iraq and Saudi Arabia, which were India’s primary suppliers in the past decade, as well as the UAE and the US. Iraq supplied 0.83 million bpd of oil in May, while the UAE shipped 203,000 bpd, and the US accounted for 138,000 barrels per day.
Factors Driving the Trend
The dramatic increase in imports from Russia can be attributed to Indian refiners capitalizing on the availability of abundant Russian crude, which is offered at a discount compared to other grades. Previously, Indian refiners were deterred by high freight costs associated with Russian oil, but they now find it economically favorable. Refiners have grown confident in processing Russian crude, leading to a voracious appetite for this source. Industry experts cited by various news agencies predict that Indian refiners will continue to increase their reliance on Russian crude as long as they can back off from spot crude purchases.
One of the key drivers behind the surge in imports is the favorable pricing. In April, the average cost of Russian crude, including freight costs, landed on Indian shores at $68.21 per barrel, the lowest level since the Ukraine conflict began. In comparison, Saudi Arabian crude was priced at $86.96 per barrel, while Iraqi oil stood at $77.77 per barrel. Although the May import price has not yet been released, the cost advantage enjoyed by Russian oil makes it an attractive option for Indian refiners.
Russia’s increased oil sales to India are partly attributed to the European Union’s ban on Russian seaborne oil imports and the imposition of a $60-per-barrel price cap in December. These restrictions prevent other countries from utilizing EU shipping and insurance services unless they sell oil below the cap. Industry officials have revealed that Indian refiners are leveraging the UAE’s dirham to pay for oil imported at prices lower than $60, further facilitating the Russian oil trade.
For all the latest business News Click Here
