Crude oil imports to India from Russia rose to a 9-month high in April despite the US sanctions on some of the Russian vessels and shipping companies not adhering to the G7 price cap of $60 per barrel on its seaborne crude delivery, according to an analysis of data provided by intelligence firm Vortexa.
Russia exported 1.78 million barrels of crude oil per day to India last month, up 13.4% from the previous month, the data showed. This was the highest since July 2023 when imports from Russia stood at 1.99 million barrels per day. In the same period last year, the country imported 1.74 million barrels per day of Russian crude oil.
India’s cumulative imports during the month however declined marginally to 4.54 million barrels per day from 4.91 million bpd in March.
Imports from the Middle East countries, the traditional suppliers of crude oil to India, however, declined in April due to lack of price competitiveness.
“Imports of Russian crude rose in April, driven by higher Russian crude exports in February and March and lower purchases by Chinese refiners,” said Serena Huang, analyst at Vortexa. “Middle East exporters have as a result, lost market share this month given their crude being less price competitive,” she said.
Even though Iraq remained the second top supplier of crude oil to India after Russia, its imports fell significantly by 35% on month to 776,000 barrels per day in April. Saudi Arabia, the third largest exporter of crude oil to the country, imported 680,000 barrels per day of crude oil, up by 3.7% from March.
According to an analysis by ICRA, the unit value of imports from Russia was 16.4% and 15.6% lower than the corresponding levels from West Asia in FY23 and the first 11 months of FY24, respectively.
Post the US sanctions on some Russian vessels, concerns erupted on the continuity of high Russian flows. However, even after the narrowing of discounts by the country, Indian refiners see it much cheaper than the Middle East grades.
Even though these discounts are enough to sustain high Russian crude supply to India, it could swell up the country’s crude import bill which has over the past few years remained low, as per analysts.
Discounts on Russian flagship grade Urals have come down to $3-$4 per barrel, Viktor Katona, lead crude analyst at Kpler had earlier said, down from the earlier discount of $8-$10 per barrel.
The extent of monthly discounts relative to price narrowed sharply during the course of FY24, ICRA said in its latest report. The domestic rating agency estimates discounts by Russia to have narrowed to around 8% on an average in September-February last fiscal from approximately 23% in April-August of FY24.
If the discounts on Russian oil continue to remain at the prevailing levels, it could inflate India’s net crude oil import bill to $101-104 billion in FY25 from $96.1 billion in FY24, the report said.
However, despite shrinking Russian discounts and stringent Western sanctions, analysts do not see Russian volumes declining going ahead due to the rising prices of Middle East grades amid declining exports.
“India’s imports of Russian crude are expected to remain robust in the months ahead, as long as prices remain discounted to Middle Eastern rival grades,” Huang noted. “Middle East’s medium and heavy-sour crude prices have been climbing amidst a decline in exports due to OPEC’s production curtailment as well as the start-up of new refining capacities and upgrading of existing refineries.”
Post the outbreak of conflict in Ukraine, Russia has emerged as the top supplier of crude oil to India on the back of healthy discounts it offered. Russia’s share in total imports of the country increased to 39.2% in April from the fall of 34.5% in March. The share however remains lower than the earlier peak of 45% in May 2023 when the purchase volume stood at 2 million barrels per day.
