India has saved billions of dollars on oil imports in the past two years by purchasing discounted crude from Russia, the Times of India reported on Tuesday, citing data compiled by ICRA Research ratings agency.
The country saved an estimated $5.1 billion on oil imports in the 2022-23 financial year, and a further $7.9 billion in the first 11 months of 2023-24, according to the report. Analysts explained that the savings were due to increased purchases of Russian oil.
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Moscow began offering large discounts on its crude to attract new markets following the loss of its traditional buyers due to the Ukraine conflict, as well as sanctions imposed on Russia by Western nations, including a $60-per-barrel price cap on its oil.
India is Asia’s third-biggest economy and the world’s third-largest oil consumer. It depends on imports to meet roughly 80% of its demand for crude. According to analysts, a lower oil import bill is keeping the Indian government’s fiscal math on track and helping the country to combat inflation.
Based on the latest import data from the Indian Commerce Ministry, the share of Russian crude in India’s oil import basket soared to about 36% between April 2023 and February 2024 from around 2% in 2021-22.
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While the discounts that Russia is offering on its oil are not constant, having shrunk from double digits in mid-2022 to around 8% on average in the past six months, India’s demand for Russian crude has remained stable, even after the West’s most recent efforts to enforce sanctions.
The US and its allies recently blacklisted a number of intermediaries and individual vessels, including some operated by Russian state-owned tanker company Sovcomflot, for carrying Russian oil above the price cap. The measures caused payment issues and a slight drop in crude sales in late 2023 and early this year.
However, according to statistics compiled by tanker-tracking firms, Indian imports of crude from Russia spiked in April to roughly 1.82 million barrels per day (bpd), with Moscow’s deliveries once again outpacing those from India’s traditional Middle Eastern suppliers, Iraq and Saudi Arabia. Indian purchases of Russian oil last month also exceeded those of China, another major crude importer and one of Russia’s largest buyers, by 450,000 bpd, Business Insider reported this week, citing data from market intelligence agency Vortexa.