India imports $2.8bn crude oil from Russia in July, almost 40% of total oil purchases

India bought USD 2.8 billion worth of crude oil in July from Russia and is the second largest importer, while China remains the largest importer of Russian oil, newswire PTI reported on Friday. India is the world's third-largest oil-consuming and importing nation.

Russia became India's biggest supplier of crude oil as Russian oil was given a discount after European nations avoided purchasing it from Moscow following sanctions in the aftermath of Russia's invasion of Ukraine.

Before the Russia-Ukraine war, Russian imports were less than one per cent of total oil imports. According to reports, Russian imports now form almost 40 per cent of India's total oil purchases.

The report, citing the Centre for Research on Energy and Clean Air (CREA), said that China has 47 per cent of Russian crude exports, followed by India (37 per cent), the EU (7 per cent), and Turkey (6 per cent).

Apart from oil, China and India also bought coal from Russia. “From 5 December 2022 until the end of July 2024, China purchased 45 per cent of all Russia's coal exports followed by India (18 per cent). Turkey (10 per cent), South Korea (10 per cent) and Taiwan (5 per cent) round off the top five buyers list,” it said.

“India was the second-largest buyer of Russian fossil fuels in July. Almost 80 per cent of India's imports (valued at Euro 2.6 billion or USD 2.86 billion) comprised crude oil,” the report said.

India, which is more than 85 per cent dependent on imports to meet its oil needs, spent USD 11.4 billion in July to import 19.4 million tonnes of crude oil, the PTI report said citing official data.

Price cap policy and growth of shadow tankers

In July, the discount on Russian Urals-grade crude oil widened by 9 per cent month-on-month to USD 16.76 per barrel compared to Brent crude oil. The discounts on the ESPO grade and Sokol blends remained relatively stable at USD 4.23 per barrel and USD 6.11 per barrel, respectively.

According to the PTI report citing CREA, in July, 36 per cent of Russian seaborne crude oil and its products were transported by tankers regulated under the oil price cap. The rest was shipped by 'shadow' tankers and hence was not subjected to the oil price cap policy.

The US and Western nations introduced a price cap policy in late 2022 to maintain the prices of Russian oil coming to the global markets, limiting Russia's revenue from crude sales. Russian cargoes could only get Western services such as insurance and shipping for sales below USD 60 a barrel.

To avoid the price cap policy, a dark or shadow fleet of oil tankers emerged. The shadow fleet consists of second-hand and old oil tankers with unclear ownership structures to hold them accountable for and follow Western laws.

“81 per cent of the total value of Russian seaborne crude oil was transported by 'shadow' tankers, while tankers owned or insured in countries implementing the price cap accounted for 19 per cent,” the report quoted CREA.

“Russia's reliance on tankers that are owned or insured in G7 countries has fallen due to the growth of 'shadow' tankers. This subsequently impacts the coalition's leverage to lower the price cap and hit Russia's oil export revenues,” it added.