Discounted seaborne crude oil flowing from Russia to India, which accounts for more than one-third of New Delhi’s overall imports, has opened up avenues to make huge margins — sometimes to the tune of $23 a barrel — from transporting the critical commodity.

The findings form part of a report by the Oxford Institute for Energy Studies (OIES), released on Monday, on the outlook for Russia’s oil and gas production and exports, which said “the biggest beneficiary of this new trade at discounted prices has been India”.

The report pointed out that there is an “obvious logic” on increased Indian purchases of Russian oil due to the large discount on Urals Blend to Brent, but it needs to be remembered that this is based on the FOB price in the Baltic Sea.

Margins on transporting crude

“The discount has not only offered cheap oil to India but has also opened a huge margin to be made in the provision of transport and ancillary services to deliver the oil from northern Europe to Southern Asia,” the OIES study said.

Analysing the delivered price of Russian oil to the west coast of India with the FOB price at Primorsk during 2023, the study said that although the differential narrowed significantly over the last eight months (till August 2023) the margin has ranged from a high of around $23 per barrel to the current $8 per barrel.

“This has tempted traders and tanker owners to get involved with the trade in Russian crude not only to India but also to other Asian destinations where similar margins have been on offer and has helped to facilitate the liquidity of the global oil market. This has underpinned the decline in the oil price from its high of over $122 per barrel in May 2022 to the current level of around $84 per barrel (October 5, 2023),” it added.

India advantage

OIES said that the biggest beneficiary of this new trade at discounted prices has been India. It also said that India’s Foreign Minister S Jaishankar noted in November 2022, “Russia has been a steady and time-tested partner…if it works to my advantage, I would like to keep that going.”

This strategy has led to a marked shift in India’s oil import geography, with Russia accounting for as much as 40 per cent of total imports in some months in 2023, while other suppliers such as the UAE, Iraq and Saudi Arabia have seen their shares decline.

“According to some commentators India may now have reached a limit of its exposure to Russian crude, but there is no immediate sign of a return to previous low levels,” it added.


The OIES study pointed out that in 2023, it is possible to say that Russia managed to redirect the flows of its crude oil exports away from so-called “unfriendly” countries to alternative markets and to limit any decrease to manageable levels driven mainly by an agreement with the OPEC+ group to constrain exports.

This happened thanks to the significant discounts that Russian energy commodity exporters offered to buyers in Asia (mostly to India and China), although the extent of these discounts has been somewhat exaggerated.

“The so-called ‘mirror statistics’ from the Indian and the Chinese customs demonstrate that imported Russian crude was only $10-15 per barrel cheaper than Brent, not the often reported $35-40 a barrel,” it added.