Russia is reported to have become India’s largest supplier of crude oil in October 2022 as refiners stepped up the purchase of discounted seaborne oil. India is estimated to have imported 1.07 million barrels per day (bpd) of crude from that country during the month, up nearly 5 percent from 1.02 million bpd in September, according to cargo tracking and analytical services provider Vortexa.
Russia became India’s largest supplier after it bought a record 1.12 million bpd in June, according to the UK-based energy tracking company. Petroleum and natural gas minister Hardeep Singh Puri, however, maintained that Iraq remained the largest supplier, even as he earlier this week in an interview with international news channel CNN defended India’s decision to buy cheaper oil from Russia despite sanctions on that country by the West following its invasion of Ukraine.
Traditionally, India has met the bulk of its crude oil needs from Iraq, Saudi Arabia and the United Arab Emirates. However, the decision by OPEC+, the Saudi Arabia-led Organisation of the Petroleum Exporting Countries (OPEC) that also includes some Central Asian, South American and Asia nations apart from Russia, to cut production and maintain prices at elevated levels was a matter of concern for the Indian government. Its pleas to leading producers in West Asia to consider measures to lower the price of the fuel failed to yield any favourable results.
Purchasing Russian oil was not an option at one point given the costs involved in transporting the fuel. As a result, Russia's share in India’s oil import basket was tiny. Commerce ministry data shows that about 2 percent of crude imports worth $2.47 billion came from Russia in 2021-22. In comparison, that is almost equivalent to the imports from that country in April-May of the current fiscal year.
That is in no small measure due to the deep discounts offered by Russian that undercut crude oil from West Asia. As a result, Russia’s share in India’s petroleum crude imports by value zoomed to about 16 percent in the first half of the current fiscal. India bought nearly as much crude by volume from Russia in the April-August period as it had from Saudi Arabia, commerce ministry data showed. Volume data for September has not been published by the commerce ministry yet.
The rise in oil imports from Russia also made that country India’s fifth largest trade partner in September. Bilateral trade with Russia is now larger than trade with countries such as Indonesia, Iraq, Singapore, South Korea and Australia.
Russia was the seventh largest trade partner during April-August 2022, but as crude purchases continued, it got ahead of Iraq, the largest supplier of crude to India, and Indonesia, a major supplier of coal and edible oils.
Bilateral trade with Russia is mostly a one-way street, dominated by petroleum crude imports. India’s exports to that country have been small. Indian refiners, mostly those in the private sector, imported petroleum crude worth $14.07 billion between April and September 2022. Imports of petroleum products also rose to $1.52 billion. In the same period of the last financial year, India imported crude and products worth only $1.58 billion.
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