Russia’s share in India’s crude imports soared to 19.1 per cent in FY23 (2022-23), up from 2 per cent a year ago, the Reserve Bank of India (RBI) said in its Annual Report FY23 released on Tuesday.
The country’s overall import of crude oil rose to $162.2 billion in FY23, up from $107.5 billion, data from the Department of Commerce shows. This 50.7 per cent rise is attributable to Indian refiners getting access to much larger volumes of Russian crude oil over the past one year at highly discounted prices.
India’s crude imports from Russia jumped 14 times in FY23, rising to $31.02 billion from just $2.2 billion in the previous year. Russia managed to unseat traditional sources of crude for India, such as Saudi Arabia, United Arab Emirates, and Kuwait. From a market share of less than 1 per cent in India’s import basket before the Ukraine conflict, inbound flows from Russia rose to become the single largest supplier of crude oil.
Officials say the current trend is expected to continue for the time being as Russian oil continues to reach India.
As of April, Russian crude was the largest source of oil for India, averaging 1.68 million barrels per day (bpd), up from 1.64 bpd, shows estimates made by London-based commodity data analytics provider Vortexa, which tracks ship movements to estimate imports. The average daily volumes have continuously increased for the past six months.
But historical sellers in the Persian Gulf have also reached out to Indian refiners with offers to open discussions on what level of discounts would be needed to lure them back.
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Case in point, Baghdad last year had undercut Russia from June by supplying a range of crude oils that on average cost $9 a barrel less than the Russian variety. The extremely price-sensitive market, therefore, had shifted heavily back in favour of Iraq. It had again moved back in Moscow’s favor by the end of FY23.