Over half of Russian oil exports to India this fiscal; Russian crude economical for Indian refiners despite lowering discounts

Over half of Russian oil exports to India this fiscal; Russian crude economical for Indian refiners despite lowering discounts

Indian refiners have bought over half of the oil exported by Russia so far in the current fiscal year, vying with firms from a handful of other countries that remained keen to buy the heavy sour oil, despite the western sanctions.

According to energy cargo tracker Vortexa, till mid-August this fiscal, India imported 1.77 million barrels per day (mbpd) of the total 3.53 mbpd of oil Russia exported, thanks to the deep discounts.

The balance 11% was imported by countries including Turkey and Bulgaria. Pakistan, which imported two consignments of Russian crude oil last June, stopped the trade on the grounds of the quality of crude coming from Russia.

India, which had less than 2% of crude oil import from Russia before the G7 advanced economies imposed sanctions on Russia after it invaded Ukraine in February 2022, increased its crude oil import from Russia to a maximum of 42% in July.

However, with the 500,000 barrels per day cut in oil exports by Russia since the start of August has led to a 27% decline for India over the previous month. India imported 1.4 mbpd of oil in the first half of August as against 1.9 mbpd in the month of July.

India’s import was still the highest at 46% of the total Russian oil export made in August, followed by China accounting for another 40%.

Analysts believe India and China will continue to import more than 80% of the Russian crude in the foreseeable future.

“Lot of countries under the pressure of the G7 and the US are not purchasing Russian crude. More than 80% of the Russian oil has been coming to India and China,” said Prashant Vasisht, vice president and co-head of corporate ratings at ICRA.

Russian suppliers, however, have started lowering the discounts particularly after the announcement of production cut by OPEC countries and Russia’s own decision to cut down exports to jack up the oil price, which was down for two months since mid-April.

“Discounts have reduced, but not so much to make it a weak proposition because the quantities are so huge that even some discount will lead to huge savings,” Vasisht said, adding that there may not be further lowering of Russian oil import this year.