News

Published: May 30, 2023
Updated: May 30, 2023

Russia Emerges as Dominant Supplier of Crude Oil to India, Displacing Traditional Sources

In the Annual Report FY23 released by the Reserve Bank of India (RBI), it was revealed that Russia's share in India's crude oil imports surged to 19.1% in FY23, a significant increase from 2% in the previous year. Indian refiners gained access to larger volumes of Russian crude oil at highly discounted prices, leading to a substantial rise in overall crude oil imports.

Sharp Increase in Crude Imports from Russia:

India witnessed a staggering 14-fold increase in crude oil imports from Russia during FY23. The value of imports rose from $2.2 billion in the previous year to $31.02 billion. This surge allowed Russia to surpass traditional crude oil suppliers to India such as Saudi Arabia, the United Arab Emirates, and Kuwait. Russia's market share in India's import basket rose from less than 1% to become the largest supplier of crude oil.

Continued Trend and Growing Volumes:

The RBI report suggests that the current trend of increased crude oil imports from Russia is expected to continue, as Russian oil continues to find its way to India. As of April, Russian crude oil accounted for the largest share of India's oil imports, averaging 1.68 million barrels per day (bpd). This figure has been consistently rising over the past six months, indicating the sustained growth in volumes.

Competition and Discounts from Persian Gulf Sellers:

While Russia has emerged as the dominant supplier, historical sellers in the Persian Gulf region are not sitting idle. These sellers have started reaching out to Indian refiners, offering discussions on potential discounts to entice them back. Baghdad, for instance, undercut Russia's prices last year, supplying various types of crude oil that cost an average of $9 per barrel less than the Russian variety. The price-sensitive market responded favourably to Iraq's offerings. However, by the end of FY23, the scales had once again tipped in Moscow's favour.

Discounted prices make Russia a favourite supplier for India

Russia's significant increase in crude oil imports to India has reshaped the country's oil supply dynamics, with Russia becoming the primary supplier. The ability to provide larger volumes at discounted prices has allowed Russia to displace traditional suppliers from the Persian Gulf region. While competition from these suppliers persists, Russia's current dominance is expected to continue in the near term. The evolving dynamics of crude oil imports underscore the importance of strategic partnerships and price competitiveness in the global energy market.