India’s Russian oil imports dent Gulf’s market share

August 29, 2024

NEW DELHI, INDIA - MARCH 15: Union Minister of Petroleum and Natural Gas Hardeep Singh Puri addresses during the launch of ëEthanol 100í at Indian Oilís Irwin Road Service Station, on March 15, 2024 in New Delhi, India. According to an official statement, ETHANOL 100 stands as a cleaner, greener alternative to gasoline, boasting lower emissions of greenhouse gases and pollutants, thus aiding in combating climate change and enhancing air quality in our communities. With its high-octane rating, typically between 100-105, ETHANOL 100 proves ideal for high-performance engines, ensuring improved efficiency and power output all while minimizing environmental impact. (Photo by Sonu Mehta/Hindustan Times/Sipa USA )No Use Germany. — India’s petroleum minister, Hardeep Singh Puri, is expected to visit the UAE soon; long-term oil and gas deals are likely to be under discussion

India overtakes China as top importer
Russia supplies India with 2 million bpd
Sanctioned oil is 44% of India’s imports

Energy-hungry India has overtaken China as the world’s top importer of Russian oil as New Delhi takes advantage of sizeable discounts and shuns Gulf exporters to satisfy growing demand.

India’s oil intake from Russia rocketed to record levels of more than 2 million barrels per day in July, from just 88,000 bpd in 2021-22, according to reports.

Russia has taken market share from traditional top suppliers such as Iraq, Saudi Arabia and the UAE, which used to supply around 60 percent of India’s crude imports.

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The discounted, sanctioned Russian crude, transported mainly by a dark fleet, now constitutes 44 percent of all of India’s oil imports, an increase of 12 percent year on year, according to Reuters.

Despite the surge in Russian supplies, India’s crude purchases from the Middle East rose 4 percent in July, increasing the region’s share in India’s overall mix to 40 percent.

India relies heavily on oil and gas to produce electricity and meets nearly 90 percent of its crude oil demand through imports.

In 2023, the country imported nearly 4.7 million bpd of crude oil. According to the International Energy Agency, India’s oil demand growth is anticipated to increase by about 1.2 million bpd, reaching 6.6 million bpd by 2030.

“Oil and gas imports constitute a significant portion of India's overall import budget, rendering it a highly price-sensitive market,” said Palash Jain, Middle East oil analyst at Facts Global Energy.

“As per the latest reports from the Indian ministry sources, Indian refineries have benefited to the tune of over $10 billion by buying Russian crude at a discount,” said Vijay Valecha, Dubai-based chief investment officer at Century Financial.

Poten & Partners, a New York broker, has estimated that Russia could have been offering discounts of up to $40 a barrel. The discounts have narrowed gradually in recent months, with current levels hovering around $3-$4 per barrel, according to Facts Global Energy.

Jain sais “as the discounts on Russian crude oil diminish, opportunities for Gulf producers to regain market share expand”.

India’s petroleum minister, Hardeep Singh Puri, will visit the UAE in the coming months, and long-term oil and gas deals are likely to be under discussion.

During the Indian prime minister Narendra Modi's visit to Ukraine last week, Subrahmanyam Jaishankar, the external affairs minister emphasised that India’s crude oil purchase policy is motivated by market conditions.

Earlier this year, he said: “I am smart enough to have multiple options; you should admire me.”