Russia remains India's top crude supplier, imports rise 14% in January

Russia remained the top supplier of oil to India in January, accounting for nearly a third of the crude brought into the country, according to data from the commerce ministry.

At $4.47 billion, the value of the crude oil supply from Russia jumped 41% year-on-year. Sequentially, crude imports from that country increased 14% from $3.92 billion in December 2023, the data showed.

Moscow was the biggest crude supplier to India in 2023, accounting for more than 30% of its imports, and will likely remain so through early 2024 despite the Red Sea crisis, as per a report by S&P Global Commodity Insights in January.

This is significant because, despite Russian oil initially remaining unaffected by the Houthi attacks in the Red Sea, the situation has evolved with recent reports of Russian oil cargoes coming under attack. This has forced ships to take different routes, via the Cape of Good Hope, and traders to recalculate costs.

Meanwhile, the increase in oil supplies from Russia has coincided with a year-on-year decline in imports from traditional suppliers in the Gulf region. Iraq was the second-largest source of crude oil for India in December, supplying $2.54 billion worth of the commodity, 5% higher year-on-year.

Supplies from Saudi Arabia fell 31.3% on year to $1.55 billion in January. Among the top five suppliers, the United Arab Emirates (UAE) and the US followed, with their supplies to India worth $980.24 million and $107.49 million, respectively. The UAE saw a 6.70% rise in its oil supplies to India in January 2024, up from $918.63 million a year ago. In contrast, crude oil supplies from the US to India slumped about 91%, falling to $107.49 million in January.

Prior to the Ukraine conflict, in fiscal year 2021-22, Russian oil accounted for only 2% of India’s total oil imports, with Iraq being the top supplier, followed by Saudi Arabia and the UAE.

However, post-invasion, Russia climbed to the top, driven by substantial discounts on oil prices. Despite a decrease in these discounts from over $30 per barrel to $4-6 per barrel, India's procurement of Russian oil has continued, even amid Western concerns.

Petroleum minister Hardeep Singh Puri has time and again said that the oil refiners would look at acquiring cheaper oil from different geographies to ensure affordability and availability of fuel and achieve energy security.

In January, India's total oil import bill increased slightly by over 4% sequentially to $12.04 billion, with a marginal year-on-year growth of 0.1%.

Despite the stabilizing effect of discounted Russian oil prices, which have largely remained below the G7-imposed price cap over the last year, the ongoing conflict between Russia and Ukraine, along with tensions in the Red Sea, continue to pose risks to market stability.

On 13 March, crude oil prices jumped 2% due an attack on Russian oil refineries by Ukraine. The escalation of geopolitical tensions, coupled with the OPEC+ coalition's decision, which includes Russia, to maintain reduced oil production, has pushed crude oil prices above $85 per barrel. 

As of 0140 pm, Brent crude for the May contract traded at $85.88 per barrel on, marking a 0.63% increase from its previous closing.