India’s crude oil imports from Russia have soared to 1.6 million barrels per day in February, surpassing combined imports from traditional suppliers Iraq and Saudi Arabia. Russia continued to be the largest supplier of crude oil to India for the fifth consecutive month, accounting for more than one-third of all oil imported, according to energy cargo tracker Vortexa. Refiners are opting for plentiful Russian cargoes available at a discount to other grades.
India, the third-largest crude oil importer globally, has been purchasing Russian oil at a discounted rate after some in the West shunned it as a means of punishing Moscow for its invasion of Ukraine. The surge in Russian imports has come at the expense of Saudi Arabia and the United States, with oil imports from Saudi falling by 16% month-on-month and those from the US declining by 38%.
Russia’s share of India’s crude oil imports rose from a market share of less than 1% before the start of the Russia-Ukraine conflict in February 2022, to 35% in February 2023, making it India’s largest oil supplier. According to Vortexa, Russia now accounts for more than the combined oil bought from Iraq and Saudi Arabia, India’s primary oil suppliers for decades. In contrast, Iraq supplied 939,921 barrels per day of oil in February, while Saudi Arabia supplied 647,813 barrels per day.
Serena Huang, Vortexa’s head of Asia-Pacific analysis, said, “Indian refiners are enjoying a boost in refining margins from processing discounted Russian crude. Refiners’ import appetite for Russian barrels is likely to remain robust as long as the economics are favourable, and financial and logistical services to support the trade are available.” Russia has been selling record amounts of crude oil to India to make up for the gap in its energy exports after the European Union banned imports in December.
Industry officials said Indian refiners are using the UAE’s dirham to pay for oil that is imported at a price lower than USD 60. “Almost a quarter of the Russian imports are now paid in dirham,” an official said.