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According to The Economic Times, India’s crude oil imports from Russia have surged to around 36% in the fiscal year 2023–2024, up from just 2% two years ago. Additionally, a study by ICRA Research reveals that India has saved approximately $13 billion due to discounted crude oil imports from Russia in the past two years.
The rating agency’s report highlights the year-on-year decline in crude oil prices. India, being one of the largest energy consumers globally, has significantly increased its crude oil imports from Russia since the Russia-Ukraine conflict began in 2022. ICRA estimates that this has resulted in savings of up to $5.1 billion in India’s oil import bill during 2022-2023 and $7.9 billion in the first eleven months of 2023-2024.
Vortexa, an energy commodities tracking firm, states that India received 1.36 million barrels of crude oil per day from Russia in March 2024, a slight increase from 1.27 million barrels per day in February 2024. According to India’s Ministry of Commerce, the country imported $3.61 billion worth of oil from Russia in February 2024, following $4.47 billion in January 2024.
The reason behind Russia emerging as India’s top supplier is the discounted crude oil it offers. After Western countries shunned Russian oil, India and China became the biggest beneficiaries. Industry estimates suggest that the discount on Russian oil was over $30 per barrel in 2022 but has dropped to below $5 per barrel in 2024.
However, ICRA reports that the discount has significantly reduced recently, from about 23% in April-August to an average of 8% in September 2023 – February 2024. This has led to a substantial decrease in savings during the latter period.
If the discount on Russian crude oil purchases remains at the current low level, ICRA predicts that India’s net oil import bill will rise to $101-104 billion in the fiscal year 2025, up from $96.1 billion in 2024. Assuming an average crude oil price of $101-104 billion next year, the average price would be $85 per barrel.
India is the world’s third-largest oil importer and consumer. The Asian nation has long relied on neighboring Middle Eastern countries to meet most of its oil demands to cut transportation costs. Traditionally, Iraq, Saudi Arabia, and the UAE have been India’s primary crude oil suppliers.
According to data from the Ministry of Commerce and Industry for February 2024, India imported $2.6 billion worth of crude oil from Saudi Arabia, making it the second-largest supplier. Iraq stood at the third position, with crude oil imports valued at $2.24 billion in February 2024. India’s overall oil import bill for February 2024 was $13.25 billion.
