Russia remains top oil supplier to India, imports climb 25% in December

Russia remained the top supplier of oil to India in December, accounting for nearly a third of the crude brought into the country, according to commerce ministry’s data.

At $3.92 billion, the value of the crude oil supply from Russia increased by 25% year-on-year. Sequentially, crude imports from that country increased by 8% from $3.61 billion in November last year, the data showed.

Moscow was the biggest crude supplier to India in 2023, accounting for more than 30% of its imports, and will likely remain so through early 2024 despite the Red Sea crisis, as per a report by S&P Global Commodity Insights in January.

This is significant because, despite Russian oil initially remaining unaffected by the Houthi attacks in the Red Sea, the situation has evolved with recent reports of Russian oil cargoes coming under attack. This has forced ships to take different routes, via the Cape of Good Hope, and traders to recalculate costs.

Meanwhile, the increase in oil supplies from Russia has coincided with a year-on-year decline in imports from traditional suppliers in the Gulf region. Iraq was the second-largest source of crude oil for India in December, supplying $2.42 billion worth of the commodity, 4% lower year-on-year.

Supplies from Saudi Arabia and the United Arab Emirates (UAE) fell 24.84% and 3.01% to $1.91 billion and $973.85 million, respectively. The US was the fifth-largest supplier in December, with oil worth $413.61 million coming from the country. Imports from the US have declined by a massive 79.87% year-on-year.

Prior to the Ukraine conflict, in fiscal year 2021-22, Russian oil accounted for only 2% of India’s total oil imports, with Iraq being the top supplier, followed by Saudi Arabia and the UAE.

However, post-invasion, Russia climbed to the top, driven by substantial discounts on oil prices. Despite a decrease in these discounts from over $30 per barrel to $4-6 per barrel, India’s procurement of Russian oil has continued, even amid Western concerns.

Geoffrey R. Pyatt, Assistant Secretary of State for Energy Resources, US, recently said that India has played a key role in stabilizing the global energy market, which has been fraught with volatility due to the ongoing Russia-Ukraine war.

India’s total oil import bill in December declined by 24% year-on-year to $11.57 billion amid a fall in crude oil prices. In the same month, the Indian basket of crude oil averaged at $77.42 per barrel, against $83.76 a barrel in April.

As of 19 February 2024, the price of the Indian crude oil basket, comprising sour grade (Oman & Dubai average) and sweet grade (Brent Dated) of crude oil processed in Indian refineries, stood at $83.32 per barrel.

In the April-December period, India’s crude import bill fell by 17% year-on-year to $122.48 billion. But imports from Russia have increased by 68.19% in the same period to $34.44 billion.
Source: Livemint