With the constant rise in oil prices and the fragile economic conditions, imports of crude oil in India have been a hassle. Russia has become the second biggest crude oil supplier to India surpassing Saudi Arabia.
On 7 August 2022, Sunday, Russia surpassed Saudi Arabia becoming the biggest crude oil supplier to India. The country reduced its oil prices, intimidating India to increase the quantity of export from the country. Currently, the biggest supplier of crude oil to India is Iraq and Russia has overtaken Saudi Arabia and is now in the second position. India’s partnership with Iraq for oil exports has been stable and it won’t change, analysts predict.
The Russian oil prices have been at the lowest since April, in May the country was providing discounts to importers up to $19 per barrel. In August it surpassed the oil prices of Saudi Arabia and increased the competition in the market. India has very gradually increased this crude oil supply from Russia.
Last year India was importing 34,000 barrels of crude oil from Russia a day. Which increased this year by 88 percent. In April India imported 2,84,000 barrels per day and increased it in May to 7,40,000 barrels a day. India’s total crude oil import bill amounts to $47.5 billion which is higher by $22.4 billion than last year. Last year during the same period the oil bill was $25.1 billion. The increase in the import of crude oil is also determined by the rise in fuel prices from last year in the country. The consumption of crude oil has increased, raising the demand and ultimately the imports.
Even though there has been tough competition between countries regarding oil pricing and exports, Iraq has maintained its position. The price it offers is $9 per barrel less than the others. With the oil export, Iraq is also a trade partner of India and gives us other benefits as well.
“Indian refiners are going to try and get their hands on the cheapest crude possible that works with their refinery and product configurations… Russian crude fits that bill for now. The Saudis and Iraqis are not entirely losing out because they are directing more supply to Europe,” said Vandana Hari, founder of Vanda Insights in Singapore.
Exports from Russia
85 percent of the crude oil in India is imported from these countries. During the Russia-Ukraine war, the prices of oil fell drastically in Russia but gave an edge to other countries to capture the oil export market. At this time India and China were the two countries highly interested in exporting from Russia due to the low prices.
China imports the majority of its crude oil from Russia and it is the biggest supplier to China. This year in May, Chia increased its crude oil supply from the country by 55 percent. China imported oil, coal, and gas worth $18.9 billion from Russia in three months ending May 2022. While India spent $5.1 billion on imports of these from the same country. Collectively, Russia generated an income of $24 billion from India and China by exporting their crude oil, coal, and gas. For India, the amount spent is 5 times higher than last year. For Russia, their income has increased by $13 million from last year’s same period.
The oil imports have been a concern for the Indian economy but are well managed by the Government. Apart from imports, our nation has also built strong relationships internationally. The rising fuel prices for our country have been a concern for the citizens. The nation’s efforts to procure the fuels and crude oils at the lowest prices will help ease the tension of the consumers.