Shift In Oil Imports: Is Russia Emerging As India's Key Supplier?

India is the third largest crude oil importer in the world and has traditionally relied on the Middle East for oil supply. However, with a shift in economic trends and a variety of other factors, Russia is emerging as an increasingly important oil supplier for India. In this article, we’ll explore the reasons behind this shift, and what it means for the global energy market.

Factors Changing Oil Imports In India

Here are the factors triggering a change in oil imports in India:      

• Russian Crude Oil– In recent months, India has been increasing its Russian crude oil imports, with Russia now emerging as the third largest supplier to the country. According to Vortexa, an energy analytics firm, India imported 1,646,311 barrels per day (bpd) from Russia in March 2022, up from just 68,600 bpd in March 2021. This surge in imports comes as the European Union banned Russian seaborne oil in December, prompting Russia to seek alternative markets for its energy exports.      
• Market Dynamics– While Russia climbs the ranks, the United Arab Emirates (UAE) overtook the United States to become the fourth largest supplier to India, with 313,002 bpd. Meanwhile, the US saw a significant drop in its exports to India, falling from 248,430 bpd in February to 136,464 bpd. This decline highlights the changing dynamics of global oil trade and the ongoing efforts by countries like India to diversify their sources of crude oil.
• New Crude Oil Avenues- India’s import of Russian oil could be reaching a plateau, according to Serena Huang, Vortexa’s head of Asia-Pacific analysis. She explained that while the imports growth has slowed down, refiners’ purchases of medium-sour Russian Urals hav remained steady. The imports increase can be due to increased purchases of sweeter crude oil grades such as Novy Port Light. Huang also added- domestic refiners have the potential to increase the purchases of sweeter oil grades such as ESPO blend, Novy Port Light, and Sokol for maintaining high refining runs and diversifying their crude oil sources.
• Payment Method– As reported by Industry officials, refiners in India are using the UAE’s currency (Dirham) to make payment for oil imported at a cost lower than $60 per barrel, following the EU’s imposition of a price cap. This innovative approach highlights the adaptability of both suppliers and buyers in navigating the complexities of the global oil market.

OFB’s Insight

India’s shift in oil imports demonstrates the changing landscape of global energy trade and the need for countries to diversify their sources of crude oil. As new suppliers emerge and traditional ones face challenges, nations must adapt and maintain a secure and stable energy supply to fulfil their energy demands.

Read More – The Middle East: The Centre Of Global Crude Oil Trade

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