Russia Makes Up 40% of Indian Oil Imports, Major Blow To OPEC

October 20, 2023

India is now importing more oil from Russia than from any other country, with Russia accounting for 40% of India’s total oil imports. This represents a significant shift in India’s oil import patterns, as OPEC countries had previously been India’s main source of oil.

The shift to Russian oil is due to a number of factors, including the fact that Russia is now offering oil at a discount to its OPEC competitors. This discount is due to the fact that Russia is facing sanctions from the West following its invasion of Ukraine.

Russia’s Share in India’s Oil Imports Surges Amidst Changing Dynamics

In the first half of the fiscal year 2023/2024, the proportion of Russian oil in India’s overall imports increased to nearly two-fifths, solidifying Russia’s position as India’s primary oil supplier. This shift has come as Indian refiners have reduced their purchases from the Middle East. India, which ranks as the world’s third-largest oil importer and consumer, has now become the leading buyer of discounted Russian seaborne oil, especially after Western countries ceased buying Russian oil following Moscow’s invasion of Ukraine.

With Saudi Arabia’s decision to extend voluntary output cuts until the end of this year, Middle Eastern oil supplies are expected to further tighten, prompting India to explore alternative sources.

From April to September, or the first half of fiscal 2023/2024, India imported an average of 1.76 million barrels per day (bpd) of Russian oil, which is more than double the approximately 780,000 bpd imported during the same period the previous year, as per tanker data from industry sources.

In the previous month, India’s imports from Russia rebounded to 1.54 million bpd, representing an 11.8% increase from August and a remarkable 71.7% surge compared to the previous year, according to the data.

Russia became the top oil supplier to India during the April-September period, followed by Iraq and Saudi Arabia. During this time, India’s imports from Iraq and Saudi Arabia dropped by about 12% and roughly 23%, to 928,000 bpd and 607,500 bpd, respectively.

The Middle East’s share in India’s overall oil imports during the April-September period fell to 44%, down from 60% during the same period in the previous year. In contrast, the share of oil from the Commonwealth of Independent States (CIS), which includes countries like Azerbaijan, Kazakhstan, and Russia, almost doubled to 43%, primarily due to increased purchases from Moscow.

Lower imports from the Middle East have reduced the Organization of the Petroleum Exporting Countries’ (OPEC) share in India’s overall oil imports to the lowest level in 22 years. The share of OPEC members, primarily from the Middle East and Africa, declined to 46% during April to September, compared to around 63% in the previous year.

These shifts in India’s oil import dynamics underscore the country’s adaptability in navigating complex global energy markets and geopolitical changes.

The shift to Russian oil could also have geopolitical implications. It could make India more dependent on Russia for its energy needs, and it could also make it more difficult for the West to impose sanctions on Russia.

Overall, India’s increased reliance on Russian oil is a significant development that is likely to have a major impact on the global oil market.