Russia remains the top supplier of crude oil to India for the 5th straight month

Russia has grown from almost nothing to become India’s largest source of crude oil in the last year. From October 2022 to February 2023, the Eurasian country was India’s top crude oil supplier for five months in a row.

Russia has supplied the most oil to India since the beginning of 2023, in January and February, surpassing traditional exporters such as Saudi Arabia and Iraq.

According to Vortexa, Russia supplied 1.26 million barrels per day (bpd) of crude to India in January, up from 1.62 million bpd the previous month. Indeed, Russia’s imports were higher in February than India’s combined imports from Saudi Arabia and Iraq.

Russia’s share of India’s import basket increased from less than 1% in January 2022 to 35% in February 2023.

Since Russia and Ukraine went to war, India and China have been the largest buyers of Russian oil.

As the European Union (EU) and the United States (US) imposed a slew of sanctions on Moscow, the latter diverted a portion of its oil supply to Asian countries at a reduced price.

Moneycontrol reported in December that since February 2022, when Russia sent troops into Ukraine, India is estimated to have saved over Rs 35,000 crore by importing cheap Russian crude.

The price cap imposed on Russian oil by the Group of Seven Countries (G7) has had no significant impact on Russia because the country is already selling oil at a lower price than the cap. India continues to benefit from low-cost oil.

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Outlook

According to experts, Russia will continue to be India’s top supplier in the coming months if Moscow continues to offer discounts.

“Demand from China has increased (for crude oil) and therefore there are more buyers of Russian oil. This has resulted in a decrease in Russia’s discounts. However, India continues to benefit from Russian discounts when compared to other countries, so it should remain the top supplier,” said Hitesh Jain, Lead Analyst at Yes Securities.

Jain also stated that Iraq, which was previously India’s largest crude oil supplier, is attempting to reclaim its market share.

“India will probably continue to import as much as it can from Russia because there are very few export destinations that Russia has with the price cap and other restrictions imposed on free trade of Russian oil in the market,” said Probal Sen, energy analyst at ICICI Securities, in January. Unless there is regulatory pressure, India is likely to continue importing as much as possible from Russia. “I don’t believe the mix will change significantly in the near future.”

Sen refers to regulatory pressure as the West urging countries to stop buying Russian oil.