India went on a bargain hunt for Russian crude as the conflict prompted Moscow’s traditional buyers to stay away from those barrels and traders, stuck with shipments, began to offer big discounts. India has opted to import crude oil Russia Despite pressure from developed countries to stay away from shipments in the wake of Moscow’s decision to attack Ukraine.
The country has emerged as the second largest buyer of Russian crude oil after China. Russian Oil It accounted for 12% of the country’s total oil purchases, compared to less than 1% before the war. In July, Russia became India’s second largest oil supplier, overtaking Saudi Arabia in third place. Although Riyadh won its position back in August, Russia remains the third largest oil supplier to India, Reuters quoted trade data as saying.
Data from the Commerce Department showed that during April-July, India’s mineral oil imports from Russia increased eight-fold to $11.2 billion, compared to $1.3 billion in the same period last year. Since March, when India has increased imports from Russia, imports have topped $12 billion, up from a little over $1.5 billion last year. Of this, about $7 billion was imported in June and July.
Oil prices are important for India as it meets 83% of demand through imports, which makes the economy vulnerable. The country’s oil import bill doubled to $119 billion in 2021-22, straining government finances and impacting the post-pandemic economic recovery.
Earlier this month, the Finance Minister Nirmala Sitharaman Said at a seminar that importing oil from Russia was part of an inflation management strategy and other countries were doing the same thing.
To put things in perspective, refiners buy oil, not the government. But cheap oil has a positive effect on the macroeconomic parameters of the economy. They keep costs down by reducing the import bill and reducing demand for the dollar, controlling the current account deficit. The government’s subsidy bill also comes down to it, leaving money for social welfare and infrastructure.
This is the second time that bargain hunting in the global oil market has saved India’s money. In 2020, when oil prices crashed as the pandemic shut down the world, the government replenished strategic reserves and refiners saved Rs 25,000 crore by storing oil in ships when prices rose later, for the first time that year. was reported by TOI on May.
Russian oil continues to flow into India as traders work around issues related to sanctions in shipping, insurance and banking to make shipments attractive enough for interested buyers.