India achieves record-breaking Russian oil imports in May
- In Reports
- 12:24 PM, Jun 06, 2023
- Myind Staff
According to industry data, India witnessed a significant surge in importing cost-effective Russian oil in May, surpassing combined purchases from traditional suppliers such as Saudi Arabia, Iraq, the UAE, and the US. Vortexa, an energy cargo tracker, reports that India received an average of 1.96 million barrels per day from Russia, a 15% increase from April's peak. Currently, Russia accounts for 42% of India's total crude oil imports.
As per a PTI report, the rise in Russia's market share has coincided with a corresponding decline in oil shipments from other Middle Eastern countries to India. The report highlights that Saudi Arabia's shipments dropped to 560,000 tonnes, reaching the lowest level since February 2021. Additionally, the share of oil imports from the Organization of the Petroleum Exporting Countries (OPEC) in India reached an all-time low of 39% in May.
Traditionally, India relied heavily on OPEC nations, primarily from the Middle East and Africa, for up to 90% of its crude oil imports. However, this trend has shifted as Russian oil became more affordable following Moscow's invasion of Ukraine in February of the previous year. The majority of Russian crude imports reportedly find their way to private refineries, including those owned by Mukesh Ambani's Reliance Industries and Nayara Energy, backed by Russian state-run oil giant Rosneft. In April, these refineries accounted for more than 46% of India's crude oil imports from Russia.
In summary, industry reports indicate that India's demand for cheap Russian oil reached unprecedented levels in May, outpacing its imports from traditional Middle Eastern suppliers. This shift has resulted in a decline in the percentage of oil shipments from other nations and a decreased reliance on OPEC as Russia now plays a significant role in meeting India's crude oil requirements.
As per reports, India's petroleum demand has seen a 10.2% increase in FY23, with discounted Russian oil meeting the rising consumption of 222.30 million tonnes. However, pump prices have remained unchanged since April 2022, despite the benefits of lower oil prices. Russian imports have surpassed those from major suppliers like the US, UAE, Saudi Arabia, and Iraq, claiming 42% of India's market share. Indian refiners now turn to Russian oil due to Western import bans and favorable pricing. In April, Russian oil cost an average of USD 68.21 per barrel, while Saudi and Iraqi oils were priced higher.
According to reports, Russia is supplying record volumes of crude oil to India, filling the gap caused by the EU's ban on Russian seaborne oil imports in December. The ban includes a price restriction of USD 60 per barrel. Indian refiners are paying for oil imported below this price using the UAE dirham. Record-high Russian supplies of 8.6 million tonnes (62.8 million barrels) have reached India, while China's imports remained steady at 6 million tonnes. India's imports reached a record of 66.7 million barrels, while China's increased to 49.2 million barrels. Chinese refiners have increased their purchases of Russian crude to enhance profitability.
Image source: Outlook India
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