Cheap Russian Oil Reduces OPEC’s Share in India’s Imports to Record-Low 50%.
In 2023, India, the world’s third-largest oil importer and consumer, witnessed a historic shift in its crude oil import dynamics. Data from trade and industry sources reveals that the annual share of oil from the Organization of Petroleum Exporting Countries (OPEC) in India’s imports hit an unprecedented low, reaching 49.6%, while discounted Russian oil surged to an all-time high.
India has traditionally relied on Middle Eastern nations to fulfil the majority of its oil needs, emphasizing proximity to reduce freight costs. However, altered trade flows stemming from geopolitical tensions and increased costs from traditional suppliers have prompted India to diversify its sources and explore cheaper alternatives, including Russian oil.
The South Asian nation imported an average of 4.65 million barrels per day (bpd) of oil in 2023, marking a 2% increase from the previous year. OPEC’s share in India’s crude oil imports plummeted from 64.5% in the previous fiscal year to about 49.6% in the first nine months of the current fiscal year (April to December).
The surge in Russian oil imports played a pivotal role in this shift. In 2023, Russian oil accounted for approximately 36% of India’s total crude purchases, amounting to 1.66 million bpd. This starkly contrasts with the 2022 figures, where India imported an average of 651,800 bpd of Russian oil.
The cost advantage offered by discounted Russian oil, particularly as Western nations reduced purchases from Moscow in response to the Ukraine invasion, contributed significantly to India’s inclination towards Russian imports. This diversification strategy was reinforced by the fact that discounted Russian oil also led to a reduction in India’s intake of Middle Eastern oil to its lowest level ever.
Despite this shift, it’s worth noting that in December, India experienced a dip in its imports of Russian oil, falling to the lowest in a year. This decline, approximately 16.3% from November, was attributed to some shipments being diverted due to tightened rules imposed by Washington. These rules included heightened scrutiny by banks and service providers to ensure compliance with a $60 per barrel price cap.
Oil Minister Hardeep Singh Puri clarified that the diversion of cargoes was primarily due to pricing considerations. In the overall landscape, Russia emerged as India’s top oil supplier in 2023, surpassing Iraq, which now holds the second position, while Saudi Arabia slipped to the third position
. This noteworthy transformation in India’s oil import dynamics underscores the impact of geopolitical events and the country’s strategic efforts to secure cost-effective and diversified energy sources.
