In February, India’s imports of crude oil from Russia reached a record high of 1.6 million barrels per day (bpd), surpassing the sum of imports from its two main suppliers, Iraq and Saudi Arabia.
According to energy cargo tracker Vortexa, Russia maintained its position as the sole major supplier of crude oil, which is refined into gasoline and diesel at refineries, for a fifth consecutive month by providing more than one-third of all the oil India purchased.
Refiners keep buying up numerous shipments that are priced lower than other grades.
Russia’s market share in India’s imports increased to 1.62 million barrels per day in February, taking 35% of the market from less than 1% at the commencement of the Russia-Ukraine conflict in February 2022.
After China and the United States, India is the world’s third-largest importer of crude, and it has been buying up Russian crude that was on sale as retaliation for Moscow’s invasion of Ukraine.
The United States and Saudi Arabia have suffered as a result of the increase in Russian imports. Oil imports from Saudi Arabia and the US both experienced monthly declines of 16% and 38%, respectively.
Vortexa claims that Russia currently supplies more oil to India than the two countries that have long served as its primary oil suppliers—Iraq and Saudi Arabia combined.
In February, Saudi Arabia provided 6,47,813 bpd of oil while Iraq supplied 9,39,921 bpd, overtaking Iraq as India’s top supplier after Russia overthrew it.
At 4,04,570 bpd, UAE surpassed the US to take over as the fourth-largest supplier. US production was down from 3,99,914 bpd in January to 2,48,430 bpd.
Supplies from Saudi Arabia and Iraq are at their lowest levels in 16 months.
Serena Huang, the head of Asia-Pacific analysis at Vortexa, claimed that processing discounted Russian crude had increased the refining profits of Indian refiners.
As long as the economy is strong and there are adequate financial and logistical resources to sustain the trade, refiners’ enthusiasm for importing barrels is expected to stay strong. As a result of the European Union’s import embargo in December, Russia is exporting record amounts of crude to India to fill the gap in its energy exports.
Other nations are not permitted to use EU shipping and insurance services unless oil is sold below the cap, which the EU banned Russian seaborne oil and set a price cap of $60 per barrel in December.
Officials in the sector claimed that Indian refiners are utilising UAE’s dirham to pay for imported crude that is less expensive than USD 60.
Before the start of the conflict between Russia and Ukraine, Russia only accounted for 0.2% of India’s imports; by February 2023, that percentage had risen to 35%.
Rising Russian Oil Imports into India
India imported a record 1.4 million barrels of Russian oil per day (bpd) in January, a rise of 9.2% from the previous month. In January, a record 28% of India’s oil imports were made up of Russian crude, which continued to be the country’s leading supplier.
Indian refiners started snatching up the discounted barrels from the West as sanctions, a price cap, and a restriction on importing oil were implemented in response. Russia ranked 17th in 2021 and supplied 1% of total imports into India.
While government-set annual production restrictions are avoided by state-run refiners in the first quarter, India’s oil imports typically rise between December and January.
In the first ten months of this fiscal year, from April to January, Iraq remained India’s top provider. Saudi Arabia, which is now in third position, was replaced by Russia as India’s second-largest oil supplier. The records show that in January, Canada overtook the United Arab Emirates as India’s fifth-largest supplier.