Oil imports: After Iraq, Russia is now India’s second-biggest supplier
Virendra Pandit
New Delhi: Since February 24, when Russia invaded Ukraine, India has increased deep-discounted Russian crude imports from one percent of its total oil requirements to a whopping 18 percent.
After Iraq, Russia has emerged as the second-biggest supplier of crude to India, where refiners bought nearly 18 percent of all their imports, or 25 million tons, from Moscow in May.
India is the world’s third-largest consumer of oil, over 85 percent of which is imported. The US and China are the first and second-largest oil importers and consumers.
Until February, Saudi Arabia was India’s second-biggest oil supplier. Now it is the third-largest supplier to New Delhi.
With the Western sanctions, as some countries shunned Russian oil, Moscow offered deep discounts to India, including shipping/ freight charges and insurance. India took advantage of discounted prices, up to USD 30 per barrel, to ramp up oil imports from Russia when global energy prices have risen.
In 2021 and the first quarter of 2022, India had imported less than one percent of its crude requirement from Russia. In April, however, its total seaborne imports of Russian oil increased to 5 percent for the first time and then 18 percent in May.
However, the West, which imposed waves of sanctions against Russia, failed to dissuade India from importing the Russian crude. Several European countries continued to import natural gas from Russia—they depend on Moscow for about 40 percent of their gas requirements.
India’s Ministry of Petroleum had, in May, stated that “energy purchases from Russia remain minuscule compared to India’s total consumption.”
The Russian invasion of Ukraine left Moscow with fewer buyers for Russia’s Ural crude oil, as some foreign governments and companies have shunned Russian energy exports, and prices have fallen.
Since February, India has emerged among the top 10 importers of Russian fossil fuels, with China replacing Germany as the biggest importer of Russian oil, according to a report by Finland-based independent organization, Centre for Research on Energy and Clean Air (CREA).
It said Russia earned USD 98 billion in revenue from fossil fuel export after February 24. This included 61 percent or USD 57 billion from European nations.
In May, the European Union decided to end its reliance on Russian oil, coal, and gas by 2027. The CREA report revealed that Russian crude oil exports to the EU fell by 18 percent in May 2022.
However, this reduction was made good by India and the United Arab Emirates (UAE), leading to no net change in Russia’s crude oil export volumes. Of all Indian imports of Russian crude, the Jamnagar-based refineries bought the most significant chunk, 27 percent.
Over half of the refined oil deliveries from Jamnagar go outside of India. Around 20 percent of exported cargoes left for the Suez canal, showing they were heading to either Europe or the U.S. “We identified shipments to the United States, France, Italy, and the U.K.,” the CREA report revealed.
Major Indian refiners, like Reliance Industries, Nayara Energy (formerly Essar Oil), state-owned Bharat Petroleum, and Indian Oil Corporation have emerged as new buyers of Russia’s crude with increased volumes.
The report said that of the total 23 big global companies that were buying Russian oil before the war, 15 are still doing so.
But a gradual reduction in demand and the discounted prices have cost Russia around USD 21 million per day in May. “However, an increase in fossil demand has created a windfall: Russia’s average export prices are an average 60 percent higher than last year, even if discounted from international prices.”
