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Business News/ Industry / Energy/  Crude oil imports from Russia jump nearly fivefold in Apr-May

Crude oil imports from Russia jump nearly fivefold in Apr-May

According to data from the Department of Commerce, in value terms, the imports from Russia surged about 621% to $3.18 billion in these two months.

Crude oil imports from Russia surged to $3.18 billion. reutersPremium
Crude oil imports from Russia surged to $3.18 billion. reuters

Crude oil imports from Russia increased 371% in April-May of the current financial year.

According to data from the Department of Commerce, in value terms, the imports from Russia surged about 621% to $3.18 billion in these two months.

Russia accounted for 10.31% of India’s total crude oil imports in these two months and has become the fourth-largest supplier for India. In the corresponding period of the previous year, Russia had a 2.85% share in India’s total crude oil imports.

The increase in imports from Russia comes against the backdrop of the share of oil imports from Iraq shrinking from 27.53% to 24.37%. Nigeria’s share fell from 8.7% to 6.17%, that of the US dropped from 9% to 5.77%, and the share of Kuwait in total oil imports by India declined from 7.35% to 4.51%.

Iraq was the top supplier in May, while Saudi Arabia is now the third-biggest supplier.

This has come amid global supply constraints and with Russia offering discounted oil, following sanctions being imposed on it by western nations after the outbreak of war with Ukraine in February.

May witnessed a whopping 784% growth in oil imports from Russia in terms of value at $1.9 billion, the data showed. The surge is also because of high global crude prices compared to the same period last year when India was going through a severe second wave of the pandemic.

India continues to import oil from Russia despite diplomatic pressures from the US to not import from Russia. India, however, has maintained that the quantum of Russian oil in its overall oil import basket is meagre and has time and again stressed that it would take decisions based on the need to meet energy requirements.

The Union ministry of petroleum and natural gas had last month said that “energy purchases from Russia remain minuscule in comparison to India’s total consumption".

India is the world’s third largest consumer of oil in the world after the US and China, with imports accounting for about 85% of its energy requirements.

China has also been increasing its oil imports from Russia because of cheaper supplies.

Russia has been looking for buyers for its Ural crude oil following the outbreak of the conflict with Ukraine and sanctions from the US and European countries, and has offered oil at discounted prices. The Urals crude was not economically viable earlier because of high freight cost.

The imports are likely to rise as domestic demand in India strengthens. India’s oil demand in June rose 704,000 barrels per day, or 16.3%, on a year-on-year basis, according to data from S&P Global Commodity Insights.

The reduction in excise duty and a delayed arrival of the monsoon led to gasoil demand in June being 272,000 barrels per day higher month-on-month. However, demand has weakened seasonally as the monsoon arrives as construction and mining activities take a back seat.

Retail fuel prices have been constant at pumps despite a volatile international market. This suggests that there may be some under recoveries by oil marketing companies in selling transport fuel in the retail market.

Global oil prices, however have been subdued of late. At the time of writing the story, the September contract of Brent on the Intercontinental Exchange was $100.27 per barrel, higher by 0.78% from its previous close. On Tuesday, it fell 7% to close below the $100 per barrel mark for the first time in three months.

Queries sent to the ministry of petroleum and natural gas remained unanswered till press time.

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Published: 13 Jul 2022, 11:37 PM IST
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