Amid Ukraine war, India’s oil imports from Russia now double of traditional top supplier Iraq

New Delhi: India now imports twice as much crude oil from Russia as it does from Iraq, the country’s traditional main oil supplier, reaching a new high of 1.64 million barrels per day in March. But, as growth has slowed, the purchases seem to have reached a plateau.

According to energy cargo tracker Vortexa, Russia remained the sole largest supplier of crude oil, which is transformed into petrol and diesel at refineries, for a sixth consecutive month by providing more than one-third of all the oil India purchased. Refiners continue to snap up plentiful Russian cargo available at a discount to other grades.

Prior to the start of the Russia-Ukraine war in February 2022, Russia had a market share of less than 1% in India’s imports; by March 2022, that percentage had increased to 1.64 million barrels per day or 34%.

The amount of oil purchased from Russia in March was double the amount of oil purchased from Iraq, which has been India’s top oil supplier since 2017–18, at 0.82 million barrels per day (bpd).

India, the third-largest importer of petroleum after China and the United States (US), has been buying relatively cheap Russian oil that was on sale after some nations in the West avoided it as retaliation for Russia’s invasion of Ukraine.

India’s petroleum imports from Russia increased a little every month from 1.62 million bpd in February.

Saudi Arabia ranked as the second-largest crude oil exporter to India in March, selling 986,288 bpd, according to Vortexa. Iraq was the third largest provider, selling 821,952 bpd.

With 313,002 bpd, the UAE surpassed the US to take over as the fourth-largest supplier. US production decreased from 248,430 bpd in February to 136,464 bpd.

“While India continues to increase its imports of Russian crude month-on-month in March, the growth has slowed,” Serena Huang, Vortexa’s head of Asia-Pacific analysis, told the media.

“Refiners’ purchases of medium-sour Russian Urals have remained steady in March, and the increase in imports are attributed to higher purchases of sweeter grades like Novy Port Light,” he added.

India’s import of oil from Russia has plateaued

“The plateauing of India’s imports of Russian Urals could indicate a soft limit on its ability to take in more sour crude, given its need to fulfill its term contracts with Mideast Gulf producers.
“But domestic refiners do have room to increase their purchases of sweeter grades like Sokol, ESPO blend and Novy Port Light, in the interest of maintaining refining runs high and diversifying its crude sources,” Huang said.

Russia is exporting record amounts of crude oil to India in order to make up for the gap in its energy exports caused by the European Union’s imposition of import restrictions in December.

Other nations are not permitted to use EU shipping and insurance services unless oil is sold below the cap, which was set by the EU in December along with a ban on Russian seaborne oil and a USD 60 per barrel pricing cap.

Industry insiders claimed that Indian refineries are utilising dirham – the currency of the United Arab Emirates (UAE) – to pay for petroleum imports from Russia which costs less than $60 per barrel.

“Almost a quarter of the Russian imports are now paid in dirham,” an official said.

In March last year, India had imported 68,600 bpd of petroleum from Russia, but this year, that number has increased to 1,646,311 bpd, according to Vortexa.

India’s imports of crude oil from Iraq have decreased from 1,139,880 bpd in March 2022 to 821,952 bpd this year, year over year. Nonetheless, the US imports have decreased the most, from 419,071 bpd to 136,464 bpd.
Saudi Arabia is selling more oil than it did in March 2022, when it sold 872,683 bpd.

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