Russia became India’s second biggest supplier of oil in May, ahead of Saudi Arabia but still behind Iraq, which remains its top source, trade data showed.
Moscow has been offering record discounts for Russian crude since Western sanctions were imposed after its invasion of Ukraine in late February.
While many European importers shunned Russian oil, Indian refiners seized the opportunity to snap up low-priced crude – receiving about 819,000 barrels per day (bpd) in May, which was well over the average inflow of 277,000 bpd in April, the data showed.
Previously, Indian refiners rarely bought Russian oil due to high freight costs.
Russian grades accounted for about 16.5% of India’s overall oil imports in May, and helped raise the share of oil from the Commonwealth of Independent States (CIS) countries to about 20.5%.
That reduced the ratio of oil India buys from the Middle East to about 59.5%, the data showed.
The share of African oil in India’s crude imports last month surged to 11.5% from 5.9% in April, the data also showed.
Cheap Russian Crude a Temporary Thing?
However, Russia may not remain as India’s no-2 supplier for long. Indian refiners said last Thursday they were no longer able to get deep discounts from Rosneft.
The Russian petroleum giant was holding back on signing new oil deals with Indian refiners, as sales have been done with other customers, they said.
Russia has managed to keep exporting its oil despite increasing pressure from Western sanctions to choke Moscow’s revenue.
Three Indian state refiners – Indian Oil Corporation (IOC), Bharat Petroleum and Hindustan Petroleum – had opened negotiations with Rosneft this year for six-month supply deals.
But only IOC, the country’s top refiner, had managed to sign a deal with Rosneft – which will see it buy 6 million barrels of Russian oil every month, with an option to buy 3 million barrels more.
The other two refiners’ requests had been turned down by the Russian producer, the sources said.
More Nigerian Crude Also
The latest trade data for May showed that apart from the availability of cheaper Russian barrels, higher official selling prices of Middle Eastern oil also pushed Indian refiners to buy Nigerian crude.
“Diesel is calling the tune … if you want to boost production of diesel and jet fuel then you need Nigerian and Angolan grades. China has cut imports of Angolan grades because of Covid-related shutdowns so some of these barrels are going to Europe and some to India,” Ehsan Ul Haq, an analyst with Refinitiv, said.
India’s oil imports in May totalled 4.98 million bpd, the highest since December 2020, as state refiners raised output to meet growing local demand while private refiners turned their focus to gain from exports, the data showed.
India’s oil imports in May were about 5.6% up from the previous month and about 19% from a year earlier, the data obtained from sources showed.
India has defended its purchase of “cheap” Russian oil saying imports from Moscow made only a fraction of the country’s overall needs and a sudden stop would drive up costs for its consumers.
Higher oil imports from Russia, curbed OPEC’s share in India’s overall imports to 65% in April.
• Reuters with additional editing by Jim Pollard