India on an average imported almost 1 million barrels per day (mb/d) of crude oil from Russia in FY23, ended March 2023, becoming the largest buyer of the seaborne commodity from the erstwhile Soviet Union, surpassing China.

According to the energy intelligence firm Vortexa, India, which imported a record 1.65 mb/d in March 2023, surpassed China as Russia’s largest seaborne crude oil buyer in December 2022. March was the fourth consecutive month of India taking the top spot.

Crude oil purchases

A back of the envelope calculation of India’s crude oil purchases during FY23 from Russia, as per Vortexa data, shows that on an average the contract size was 999,817.3 barrels per day (bp/d). In FY23 till February, India’s total crude oil imports stood at 211.6 million tonnes (MT) worth a whopping $146.6 billion.

At present, Russia, which accounted for less than 2 per cent of India’s imports till February 2022, now has a share of more than 35 per cent. For comparison, the world’s third largest fuel guzzler imported 212.4 MT of crude oil worth $120.7 billion in the entire FY22.

The second half of FY23 witnessed a significant growth in supplies with cargoes surpassing 1 mb/d from December 2022 onwards. Barring April 2022 (269,634 bp/d) and June (945,296.5 bp/d), the crude supplies between April-November 2022 stood in the range of 730,000 to 930,000 bp/d.

Imports to continue

A senior government official said India will continue to purchase crude oil from Russia, and “other markets” and is always “exploring a better deal”.

“Till the price cap is not disturbed, there is no issue with imports from Russia. We will continue it. With the OPEC+ production cuts, it becomes more important for India to secure affordable and assured supplies to shield the oil marketing companies (OMCs) who have to endure under recoveries to shield the citizens from high prices,” the official added.

Analysts expects the relationship to continue in FY24 as Russia is offering discounts, mainly on the Ural grade, which is helping shore up the financial profile of oil marketing companies (OMCs), which have not raised retail prices of petrol and diesel since April 6, 2022 as the government intends to tame inflation and save the common man from fuel price volatility.

On higher imports from Russia, ICRA’s Vice President & Co-Group Head (Corporate Ratings) Prashant Vasisht said, “Indian imports of Russian crude oil have increased substantially in FY23 vis-a-vis earlier years due to the discount on landed cost basis.”

Going forward, he said, India would continue to maximise imports of Russian crude in FY24 as well. The discounts on Russian crude were in the range of $10-15 per barrel in FY23.

Going ahead, Vashisht said, “The discounts are likely to continue, given the price cap and embargo on Russian energy imports by G-7 and EU. Accordingly, India would continue to maximise Russia crude oil purchases.”