India’s imports of cheap Russian oil hit another record in May and are now more than the combined oil purchased from Saudi Arabia, Iraq, the UAE and the US, industry data showed.
India pulled 1.96 million barrels a day from Russia in May, up 15 percent from its previous April high, according to data from energy cargo tracker Vortexa.
Russia now makes up nearly 42 percent of all crude oil India imported in May. This is the highest share for an individual country in recent years.
The increase in the Russian share was at the expense of traditional suppliers in the Middle East. Shipments from Saudi Arabia fell to 560,000 tons – the lowest level since February 2021, according to figures from the shipping analytics company.
Cartel of oil producers OPEC’s share of India’s oil imports fell to an all-time low of 39 percent in May.
The Organization of Petroleum Exporting Countries (OPEC), mainly in the Middle East and Africa, accounted for as much as 90 percent of all crude oil India imported at one point, but this has been declining since Russian oil became available at a discount in the wake of Moscow’s invasion of Ukraine last February.
For the eighth consecutive month, Russia remained the largest supplier of crude oil, accounting for 42 percent of all oil imported by India.
In refineries, crude oil is converted into gasoline and diesel.
Imports from Russia now exceed combined purchases from Iraq and Saudi Arabia – India’s largest suppliers in the past decade – as well as the UAE and the US.
Iraq shipped 0.83 million barrels per day (bpd) of oil in May, while the UAE shipped 203,000 barrels per day. A whopping 138,000 bpd came from the US, the data showed.
From a market share of less than 1 percent in the Indian import basket before the start of the Russia-Ukraine conflict in February 2022, Russia’s share of Indian imports rose to 1.96 million barrels per day in May, accounting for a share of 42 percent.
OPEC supplied 1.8 million bpd of the 4.7 million bpd oil India imported in May. According to Vortexa, this was down from the 2.1 million barrels per day imported in April.
Indian refiners rarely bought Russian oil in the past due to high freight costs, but now they are picking up a plethora of Russian freight available at a discount on other grades as some Western countries have turned it down due to Moscow’s invasion of Ukraine.
Purchases from Russia in May were more than double the 0.83 million barrels per day worth of oil purchased from Iraq, which had been India’s largest oil supplier since 2017-2018. Saudi Arabia has been pushed down to number 3.
India’s imports of Russian crude continue to test new highs, reaching nearly 2 million bpd in May. Refineries have tested and gained confidence in the processing of Russian crude, and their voracious appetite for “Russian crude is likely to grow as they have room to stop buying crude oil,” said Serena Huang, head of Asia-Pacific analysis at Vortexa.
The average cost of Russian crude including freight that landed on India’s coast in April was USD 68.21 per barrel – the lowest level since the war in Ukraine. The average cost of Saudi Arabian crude shipped to India in April was USD 86.96 per barrel, while Iraqi oil cost USD 77.77 per barrel.
The May entry price has not yet been released.
Russia is selling record quantities of crude oil to India to close the gap in its energy exports after the European Union banned imports in December.
In December, the EU banned Russian overseas oil and imposed a price cap of $60 a barrel, barring other countries from using EU shipping and insurance services unless oil is sold below the limit.
Industry officials said Indian refiners use the UAE dirham to pay for oil imported at a price below $60.
According to Vortexa, India imported only 68,600 bpd of oil from Russia in March 2022. PTI ANZ SHW DRR