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According to the Baltic and International Maritime Council (BIMCO), India currently accounts for up to 40% of Russia’s crude oil as of now, averaging 1.6 million barrels per day. This marks an astonishing 1,000% growth compared to 2021, before the Russia-Ukraine conflict.
BIMCO states that Indian clients began boosting their imports of Russian oil in 2022, following EU and US sanctions. America and Europe, which used to be the dominant markets, purchased around 65% of Russia’s seaborne crude oil exports. However, the sanctions forced Russia to seek new customers, with India emerging as a key market for the discounted Urals crude.
Crude oil shipments from Russia to India need to comply with the G7 price cap of $60 per barrel or less. According to a study by ICRA Research, India has saved approximately $13 billion by importing discounted crude oil from Russia in the last two years.
The proportion of Russian oil in India’s crude oil imports continues to grow.
Russia’s market share of crude oil in India’s seaborne imports has risen, making India the largest customer by mid-2023, consistently accounting for 35-40% of Russia’s seaborne crude oil exports.
Meanwhile, India’s seaborne crude oil imports from Gulf Arab countries have decreased from nearly 70% to 45% as the region redirects exports to Northern Europe and the Mediterranean.
India has also increased its utilization of Aframax and Suezmax tankers, now accounting for 55% of imports, while the use of VLCCs has declined. This change has also resulted in older vessels being used for unloading in India, with the average age increasing by four years and the share of vessels over 20 years old rising from 2% to 13%.
BIMCO points out that Russia-India trade is likely to continue at the current level as sanctions on Russia remain in place. The International Energy Agency predicts that India’s growing oil demand may exceed Russia’s production, prompting India to seek alternative suppliers.
India is the world’s third-largest oil importer and consumer. This Asian nation has long relied on neighboring Middle Eastern countries to meet most of its oil needs to cut transportation costs. Previously, Iraq, Saudi Arabia, and the UAE were India’s traditional crude oil suppliers.
Regarding Russia’s oil production, in the first half of 2024, drilling rigs used by Russian oil companies drilled a total of 14,370 km of oil wells in Russia, a 2.5% decrease compared to the first half of 2023.
The record-high drilling rate in 2023 indicates that Russian producers attempted to maximize output from aging oil fields to maintain production rates.
According to Oilprice, GCaptain
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