In February, India’s imports of crude oil from Russia reached a record high of 1.6 million barrels per day, 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 only major supplier of crude oil, which is refined into gasoline and diesel at refineries, for a sixth consecutive month by providing more than one-third of all the oil India purchased.
Refiners continue to buy up several Russian cargoes that are offered at a discount compared to other grades. Russia’s market share in India’s imports increased to 1.62 million barrels per day in February, seizing 35% of the market from less than 1% at the commencement of the Russia-Ukraine war in February 2022.
India, the third-largest crude importer in the world after China and the United States, has been snatching up Russian oil that was on sale after some in the West avoided it 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 had monthly declines of 16% and 38%, respectively. According to Vortexa, Russia currently supplies more oil than all of India’s previous oil suppliers combined—Iraq and Saudi Arabia.
In February, Saudi Arabia provided 6,47,813 bpd of oil while Iraq supplied 9,39,921 bpd, overtaking Iraq as India’s top oil supplier after Russia overthrew it. With 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, said that processing cheap Russian crude has increased the refining profits of Indian refiners. “As long as economic conditions are favourable and financial and logistical services to support the transaction are accessible, refiners’ import demand for Russian barrels are expected to stay solid.” In order to fill the vacuum in its energy exports after the European Union prohibited imports in December, Russia is exporting record volumes of crude oil to India.
Other nations are not permitted to use EU shipping and insurance services unless oil is sold below the ceiling, 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 said that Indian refineries are utilising UAE’s dirham to pay for imported oil that costs less than USD 60. An official stated, “About a quarter of the Russian imports are now paid in dirham. Before to the commencement of the Russia-Ukraine conflict, Russia held a 0.2% market share in India’s imports; by February 2023, that percentage had increased to 35%.