Russia’s share of India’s crude oil imports has not increased further

After the sharp rise in FY23, Russia’s share of India’s oil imports may not increase further this year, analysts said, but they added that the country is likely to continue adding more crude oil suppliers from different regions at better prices.

“India will not like to rely too much on just one country or one region. You want to diversify. New regions like Guyana and Brazil are emerging,” said Prashant Vasisht, vice president and co-head, Corporate Ratings, ICRA. Russian oil, which accounted for less than 1% of India’s crude oil imports last year before the Ukraine crisis, now accounts for about a third. And the OPEC nations’ share of India’s oil imports fell to 46% from 72% last year.

Even for the full fiscal year 2022-23, Russia exported 56.4 million tons of crude oil, while Iraq accounted for 53 million tons and Saudi Arabia 43 million tons. According to government data, Russian oil imports in FY22 were just 4.4 million tons (see chart). However, Russian oil’s share may not surpass current levels due to limited take-up of more Urals, a medium-acid crude, and also due to term contracts with crude oil suppliers, which are generally 70:30.

“The increase in Russian crude oil imports is due to the rebates due to the sanctions, otherwise the logistics costs for Russia are higher. Companies keep looking for better deals,” said former Petroleum Secretary RS Pandey.

India is in talks with Guyana to source oil from its oil fields under long-term preferential price agreements. Last year, the state-owned Indian Oil Corporation signed a contract with Brazil’s Petrobras and Colombia’s Ecopetrol.

“With Guyana we are even talking about rebates to make it competitive with other crude oil suppliers as it is a longer journey. Even Saudi Arabia and Iraq are cutting prices for the big importers India and China,” Vasisht said. India, the third largest oil importer and a strong growing economy, is a key market for the oil-producing nations, especially amid recessionary pressures and expectations that oil prices will remain at current low levels.

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