Russian oil imports to India plummet to seven-month low as New Delhi turns to Saudi Arabia

Since Russia’s full scale war on Ukraine, India had steadily increased its purchases of discounted oil

Russia’s president Vladimir Putin (R) speaks with India’s prime minister Narendra Modi (L) during a visit to the shipyard Zvezda, as Rosneft Russian oil giant chief Igor Sechin (C) accompanies them, outside the far-eastern Russian port of Vladivostok in 2019 (AFP via Getty Images)

India’s import of Russian oil dipped to a seven-month low in August after steady purchase during the course of war in Ukraine, amid lower discounts for Moscow’s grades and planned maintenance outages at some plants.

Since Russia’s full scale war on Ukraine, India had steadily increased its purchases of discounted Russian oil. Indian imports of Russian oil hit a record high in October, with the country becoming India’s top oil supplier in terms of barrels per day.

The Asian ally of Vladimir Putin switched to gulf nation Saudi Arabia for its oil needs as preliminary data by Kpler and Refinitiv trade flows shows a multi-month high spike.

"Imports of Russian oil are likely to remain at subdued levels for a couple of months due to lower discounts, and that would force suppliers of Russian oil to provide deeper discounts,” said analyst at Refinitiv Ehsan Ul-Haq.

Since June this year, India’s import of Russian oil has been dipping after discounts from the European nation began to shrink, according to the data. While the import from Russia in August has slashed by a fifth from July to about 1.5 million barrels per day (bpd), buying from Saudi Arabia spiked by about 63 per cent, according to Refinitiv data.

For October loading, discounts on Russian oil are below $5 a barrel to benchmark dated Brent, a refinery source said. His company is yet to place an order for the upcoming month’s oil import.

Indian refiners could trim down imports of Russian oil as narrowing discounts were making the price of Russian grades expensive above the $60 per barrel ceiling set by Western nations, a government source told Reuters.

India could also turn to the US as the OPEC producer group is cutting oil output, at a time when gasoline demand in India and Asia is rising, "there is a possibility that Indians might increase imports of oil from the USA", Mr Haq said.

India’s fuel demand is expected to rise in the next two months due to major festivals, likely boosting India’s oil imports from the Middle East, he said.

In April this year, Russian crude oil exports were back above levels seen before the Russian invasion of Ukraine, despite the ratcheting up of Western sanctions as India and China accounted for 90 per cent of Russia’s seaborne crude oil exports, according to figures by Kpler.

The dynamics could spell a change in the oil economy and shifting bilateral relationships between New Delhi and Moscow, which diplomatically appear to be changing, as Mr Putin will not be attending India-hosted G20 summit this month.

Their BRICS coalition, however, includes Saudi Arabia – among three of the world’s biggest oil producers alongside the UAE and Iran, who are set to join the group in January next month.