Russia overtook Iraq and Saudi Arabia last month to become India’s top supplier of crude oil.
Energy cargo tracker Vortexa reported that India imported an average of 946,000 barrels of Russian crude oil per day in October, the most it has ever imported in a single month and up 5% from September.
It also imported 106,000 barrels of fuel oil per day from Russia last month, another record.
As a result, Russian oil now accounts for 22% of India’s oil imports, above Iraq’s 20.5% and Saudi Arabia’s 16%. India also imported 34% more seaborne Russian crude oil than the whole of the European Union last month.
China, however, remained the largest purchaser of Russian seaborn oil at one million barrels per day.
Nevertheless, the Vortexa report indicates a significant increase in India’s reliance on Russian oil, which was recorded at just 1% last year.
Russia has emerged as the biggest crude oil exporter to India and meets 22% of its total requirement.
— Rishi Bagree (@rishibagree) November 3, 2022
This helped India reduce its petrol/diesel prices by 3% in the last 15 months while fuel prices have increased by 50-70% in other nations. pic.twitter.com/ot3PFIUbUp
The dramatic shift is a direct result of Russia’s decision to offer discounted oil to India amid widespread sanctions over its invasion of Ukraine. India has also reasoned that its traditional suppliers in the Middle East have redirected their supplies to Europe to help overcome shortages caused by restrictions on trade with Russia.
Owing to this shift, imports from the Middle East dropped to 2.2 million barrels per day (bpd) in September, a 19-month-low. Imports from Saudi Arabia dropped to the lowest level in 14 months at 3.91 million barrels per day, a 5.6% drop from 2021.
India also sought to diversify its oil imports following OPEC+’s recent decision to cut oil production by two million bpd.
Indian oil minister Hardeep Singh Puri said in an interview with CNN on Monday that if New Delhi did not secure discounted oil from Russia, it would have disrupted the international market and increased the price to $200 per barrel.
He stressed that there is no “moral conflict” with importing discounted Russian oil, as the government has a primary “moral duty” to its domestic customers.
India has faced repeated warnings of “significant consequences,” particularly from the United States, over its decision to purchase Russian oil. In fact, Ukraine, too, has said each barrel India purchases has a “good portion of Ukrainian blood in it.” However, India has stood firm on its ability to take independent decisions as a sovereign nation.
a MUST watch - wondering if #India will be following the G7 price cap on #Russian #oil: India's Petroleum Minister said "We will buy oil from Russia, we will buy from wherever" // "I have a moral duty to my consumer"@_HadleyGamble @themmagraham pic.twitter.com/FisoWW21aR
— SilviaAmaro (@Silvia_Amaro) September 6, 2022
Experts have said, however, that the trend of India’s increasing reliance on Russian oil is not likely to continue due to the introduction of the G7’s price cap on Russian seaborne oil exports.
According to an analyst at Vortexa, crude oil deliveries will take a hit after the European Union’s ban, which will restrict ‘ice-class’ tankers from transporting crude oil from Russia’s ports in the Baltic, comes into effect on 5 December, as European companies will be barred from purchasing Russian crude oil above a certain price.
In fact, reports suggest that India’s two largest state-owned importers of crude oil—Indian Oil Corporation and Bharat Petroleum Corporation—have stopped looking for Russian imports beyond 5 December and are waiting for more information on the bloc’s sanctions, which could entail secondary sanctions against importers of Russian oil.
Russel Hard, the chief of Viton, the world’s largest independent global energy trader, said that Russian oil exports could plummet by around 1 million bpd this week as a direct consequence of the EU’s sanctions.
Puri said earlier this week that India remains in “healthy” discussions with its Western partners and has “many backup plans” if it is pushed to stop importing Russian oil. However, he has previously stated that India has never been asked to do so.