Russia surpasses Saudi Arabia to become second largest crude oil supplier to India

During April to June 2022, Russian barrels were cheaper than Saudi crude and were providing crude to India at a discount of about $19 a barrel in May. Russia emerged as the second largest supplier to India in June, just behind Iraq.

As most buyers shunned its barrels after Ukraine’s invasion, India and China have become willing consumers of Russian crude. To provide some economic relief amid increased inflation and a record trade gap, India imports 85% of its oil needs from Russia.

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According to government data, India’s crude oil import bill rose to $47.5 billion in the second quarter on the back of a jump in demand for the fuel along with a jump in global prices. It was $25.1 billion in the same period in 2021, when prices and volumes were lower. Meanwhile, crude oil prices have declined recently on concerns of economic slowdown and some relief to consumers.

“Indian refiners are going to try and try their hand at the cheapest crude that works with their refinery and product configuration. Russian crude fits that bill for now. The Saudis and Iraqis are not losing out entirely because they are directing more supplies to Europe,” Bloomberg quoted Vandana Hari, founder of Wanda Insights, as saying.

Despite reduced Russian oil rebates to Saudi crude in June, crude was about $13 cheaper and averaged around $102. Incidentally, Russia was the ninth largest crude oil supplier to India in 2021, while Saudi Arabia was the second largest.

Meanwhile, Iraq remained India’s largest crude oil supplier till June this year as well. In May, crude from the OPEC producer (Iraq) was nearly $9 a barrel higher than the Russian one, however, was at a discount in all other months. Since March, India’s imports from Russia have increased tenfold.

With Bloomberg Inputs.

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