Russia has become India's top supplier of crude oil for the last five consecutive months, from October 2022 to February 2023, surpassing traditional exporters like Saudi Arabia and Iraq. According to energy tracker Vortexa, Russia supplied 1.26 million barrels per day (bpd) of crude to India in January and 1.62 million bpd in February. In February, imports from Russia were higher than India's combined imports from both Saudi Arabia and Iraq. Russia's share in India's import basket was less than 1 percent until January 2022, but it had a 35 percent share in February 2023.
Since war broke out between Russia and Ukraine, India and China have been the largest buyers of Russian oil. As the European Union (EU) and the US imposed a slew of sanctions on Moscow, the latter diverted its oil supply to Asian countries at a discounted price. It was reported in December that India saved over Rs 35,000 crore by importing cheap Russian crude since February 2022 when Russia sent troops into Ukraine. The price cap imposed by the Group of Seven Countries (G7) on Russian oil had no significant impact on Russia, as the country was already selling oil at a lower price than the price cap. India continued to benefit from the discounted oil.
Experts say that Russia is expected to remain India's top supplier in the coming months as well if Moscow continues to offer discounts. "Demand from China has increased (for crude oil), and therefore there are more buyers of Russian oil. This has led to a decline in the discounts offered by Russia. However, India is still enjoying discounts from Russia compared to other countries, and therefore it should continue to remain the top supplier," said Hitesh Jain, Lead Analyst, Yes Securities.
Iraq, which was the top supplier of crude oil to India earlier, is also making efforts to regain its share in India. Speaking to Moneycontrol in January, Probal Sen, energy analyst, ICICI Securities, said, "India will probably continue to import as much as it can from Russia because there are very few export destinations that Russia has with the price cap and other restrictions imposed on free trade of Russian oil in the market. Unless there is regulatory pressure, it is likely that India will continue to import as much as possible from Russia. I don't think the mix will change much in the near term."
By regulatory pressure, Sen is referring to the West urging countries to stop buying oil from Russia. However, India is unlikely to reduce its oil imports from Russia as the country continues to offer discounts, which are beneficial for India's economy. The oil imports from Russia are expected to continue, and it remains to be seen if Iraq can regain its share in India's import basket.