India’s Oil Imports From Russia

INDIA’S OIL IMPORTS FROM RUSSIA

India’s imports of Russian crude oil, which have been a major component of its oil supply, experienced a decline in August compared to July’s near-record levels.

This decrease is attributed to a combination of factors including:

• Reduced oil demand due to the refinery maintenance season and
• A decrease in the availability of Russian oil for export.

THE OIL IMPORT IN NUMBERS

• August Data: India’s imports of Russian oil fell by 14.5% in August, reaching 1.80 million barrels per day (bpd). This drop was a result of both lower demand and reduced availability of Russian crude for export. Despite the decline, Russian oil still constituted 39.9% of India’s total crude oil imports for the month.
• Overall Oil Imports: India’s total crude oil imports also saw a decline of 0.32 million bpd, settling at 4.52 million bpd for August.

EXPECTED TREND IN THE COMING MONTHS

• September Outlook: Oil imports, including those from Russia, are expected to remain subdued in September due to refinery maintenance shutdowns. However, imports are projected to recover in October as refining capacity returns to normal levels and the festival season drives up fuel demand.
• Future Production: Russia is also expected to experience its own period of refinery maintenance, which may impact oil availability. Nevertheless, oil imports from Russia are likely to increase again in October, contingent upon the outcome of these maintenance activities.

CHANGES IN SUPPLY FROM OTHER SOURCES

• Iraq: India’s imports from Iraq, its second-largest oil supplier, increased by 6.7% sequentially to 0.85 million bpd in August. Iraq’s market share of India’s oil imports rose to 18.8% in August, up from 16.5% in July.
• Saudi Arabia: Conversely, oil imports from Saudi Arabia declined by 16.6% sequentially to 0.55 million bpd. Saudi Arabia’s market share decreased to 12.2% from 13.7% in July. The decline is partly due to the higher cost of Saudi crude compared to Russian and Iraqi oil.

HISTORICAL CONTEXT & PRICE SENSITIVITY

• Historical Suppliers: Prior to the Ukraine conflict, Iraq and Saudi Arabia were the top suppliers of crude oil to India. The West’s shift away from Russian oil post-2022 invasion led to increased Russian crude imports, facilitated by significant discounts offered by Russia.
• Urals Crude: Urals crude, a medium-sour oil from Russia, remained a major component of Indian imports. In August, 1.26 million bpd of Urals crude was imported, making up 70% of the total Russian oil imports to India.
• Price Sensitivity: India, as the world’s third-largest consumer of crude oil with an import dependency exceeding 85%, remains highly sensitive to oil prices. Despite shrinking discounts on Russian crude, Indian refiners continue to buy Russian oil due to the overall cost benefits associated with large volumes.

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