Friday, 17 May, 2024
By: Yash Gupte
In May 2023, OPEC's proportion of India's oil imports reached an all-time low of 39 percent. Image Source: IANS
India purchased 1.96 million barrels of oil per day from Russia in May, which is 15 percent more than in April, according to statistics from energy cargo tracker Vortexa.
India currently imports more Russian oil than it does from Saudi Arabia, Iraq, the United Arab Emirates, and the United States put together, according to a new record set in May. India purchased 1.96 million barrels of oil per day from Russia in May, which is 15 percent more than in April, according to statistics from energy cargo tracker Vortexa. Russia now accounts for a higher portion of India's oil imports, with a share of 45 percent in May. The percentage is the greatest for a single nation in recent years. Russian market share increased at the expense of traditional Middle Eastern suppliers. The lowest level of shipments from Saudi Arabia since February 2021 was 560,000 tonnes, according to data from the shipping analytics firm.
In May 2023, OPEC's proportion of India's oil imports reached an all-time low of 39 percent. As much as 90 percent of the crude oil that India imported at one point came from Organisation of the Petroleum Exporting Countries (OPEC), primarily in the Middle East and Africa, but this percentage has been declining ever since Russian oil became more affordable following Moscow's invasion of Ukraine in February 2022. Russia is now India's largest supplier, surpassing purchases from Saudi Arabia, the United States, the United Arab Emirates, and Iraq combined.
In May 2023, Iraq shipped 0.83 million barrels of oil per day (bpd), while the UAE sent 203,000 bpd. The statistics showed that as much as 138,000 bpd was imported from the United States. Before the Russia-Ukraine conflict broke out in February 2022, Russia had a market share of less than one percent in India's oil imports. By May 2023, it had increased to 1.96 million barrels per day, accounting for 42 percent of India's imports. Out of the 4.7 million bpd of oil India imported in May 2023, 1.8 million bpd came from OPEC.
Source: Ministry of Commerce and Trade
Also, the Centre for Research on Energy and Clean Air, a Helsinki based organisation in its report said that India is among the top 5 ‘Laundromat’ countries that buy Russian oil and sell processed goods to European nations, thus bypassing the European sanctions against Russia. The 5 Laundromat countries are India, China, Turkey, the UAE and Singapore. According to the report, In the 12 months following Russia's invasion, Western nations that had mainly banned the imports of Russian oil imported oil products from nations that had expanded their imports of Russian crude oil to the tune of EUR 42 billion. The EU, the majority of the G7 nations, and Australia have severely restricted their imports of Russian crude oil and oil products far into the second year of the full-scale invasion of Ukraine.
At the same time, these nations, which are all a part of the price-cap coalition with the aim of limiting Russia's fossil fuel export income, have dramatically expanded their imports of refined oil products from the nations that have grown to be the biggest buyers of Russian crude oil. The report further reveals that the price cap coalition countries increased their imports of refined oil products from China (+3.6 million tons or +94 percent), India (+0.3 million tons or +2 percent), Turkey (+1.8 million tons or +43 percent), the United Arab Emirates (+2.6 million tons or +23 percent), and Singapore (+1.8 million tons or +33 percent) one year after Russia invaded the Ukraine.
India has been highly importing the Russian crude oil since the outbreak of Russia-Ukraine war in February 2022. The western nations had heavily sanctioned Russia and economically isolated it from the rest of the world. At such a point of time, Russia decided to export crude oil at cheaper prices. Both, India and Russia have benefitted from the cheap import of Russian crude oil as New Delhi has been importing oil at very cheaper rates, saving a lot on oil bills and Moscow has been able to counter the sanctions imposed by the western world.
Russia is making improvements to trade with India as part of a plan to increase trade with other Asian superpowers like China in order to reduce the effects of Western sanctions. Moscow is also attempting to deepen or preserve its ties with other South Asian nations. Most recently, it agreed to accept Yuan as payment for the construction of a nuclear power station in Bangladesh and talked about offering Pakistan subsidised oil exports.
“India will continue to buy oil from Russia", finance minister Nirmala Sitharaman had declared even as the West mounted pressure on New Delhi to isolate Moscow. True to her words, India has not only continued to buy oil at discounted rates from Russia, but has increased the intake by a whopping 4.7 times since April 2022. Not just oil, India-Russia overall trade has increased to a whopping five times since the outbreak of Russia-Ukraine war.
The Indian port of Sikka in Gujarat is the world's largest importer of Russian seab006Frne crude oil and the greatest exporter of oil products to the price cap alliance nations. The refinery at Jamnagar is served by the port. From December 2022 to February 2023, petroleum products worth EUR 2.7 billion were exported from the port to the nations in the price cap coalition.
Despite criticism from the West, India has continued its trade relations with its erstwhile cold war partner. Time and again, India has defended its decision to buy discounted Russian oil citing national interests. The total annual bilateral trade between the two countries stood at $39.8 billion in 2022-23, $13.12 billion in 2021-22, and $8.14 billion in 2020-21. Pre-COVID, it was $10.11 billion in 2019-20, $8.22 billion in 2018-19, and $10.68 billion in 2017-18. In FY2021-22, India had a trade deficit of $6.61 billion with Russia.
The average price of Russian oil landing on Indian coasts in April was USD 68.21 per barrel, the lowest price since the Ukraine War. This price includes freight charges. In April, the average price of Saudi Arabian crude shipped to India was USD 86.96 per barrel, while the price of Iraqi oil was USD 77.77 per barrel.
Russia remained the only largest crude oil supplier for the eighth consecutive month, accounting for 42 percent of all the oil that India imported. With 222.30 million tonnes of petroleum products consumed in FY23, a 10.2 percent increase over the previous year, India has been able to meet the country's rising demand for petroleum products thanks to the inexpensive Russian oil. However, as pump prices have not moved since April 2022, the government has not transferred the advantages of low crude prices to the general public.
