India, the world’s third-largest crude oil importer, made a historic purchase of Russian oil last month, importing a staggering 33 times more than in the same month the previous year. According to data from Vortexa Ltd, the nation purchased an average of 1.2 million barrels per day from Russia in December, an increase of 29% from November. This significant increase in imports has resulted in Russia becoming India’s leading oil supplier, surpassing Iraq and Saudi Arabia.
The increased purchases of Russian oil can be attributed to Indian refiners taking advantage of discounted prices since the invasion of Ukraine led to a decrease in buyers. However, the significant increase in December may also be due to even deeper discounts resulting from sanctions imposed by the G-7 and European Union, including a $60 per barrel price cap.
India, which meets more than 85% of its oil demand through imports, is highly vulnerable to price volatility. The state-owned refiners, who have been prevented by the government from raising pump prices of diesel and gasoline since May, have increasingly favored cheaper Russian imports as a way to meet this high demand.
Serena Huang, lead Asia analyst at Vortexa, states, “Russia has likely offered its crude at an attractive discount to Indian refiners, which have surpassed China as the largest importer of Russian crude. Besides Urals, India has stepped up imports of other Russian grades like Arco, Sakhalin and Varandey in recent months.”
In addition to increased imports from Russia, India also saw an increase in purchases from Iraq, climbing 7% to around 886,000 barrels a day, and from Saudi Arabia, increasing 12% to about 748,000 barrels a day, according to Vortexa.
This trend of increased Russian oil imports is expected to continue in the coming months as India looks to diversify its oil sources and take advantage of competitive prices. However, it is important to note that this increased dependence on Russian oil may also leave India vulnerable to political and economic fluctuations within Russia.