Middle East oil producers claw back India market share from Russia

February 19, 2025, 2:15 PM

Moped riders fill up at a petrol station in Kolkata. India has been a big buyer of discounted Russian oil

Share of oil imports rises to 55%
Shortfall of Russian barrels in spot market
Greater competition from Chinese buyers

Middle East oil producers are clawing back market share from Russia in India.

The Gulf producers – led by Iraq, Saudi Arabia and the UAE – have made gains as US-led sanctions on Moscow bite and Chinese buyers take more Russian oil.

Middle East oil exports to India, which is poised to become the world’s fourth-largest economy next year, rose to a two-year high in the first half of this month, according to energy intelligence consultancy Vortexa.

The Middle East’s market share now stands at 55 percent, up from 50 percent in December and January.

However, the figure is still below the the 60 percent share before Russia’s full-scale invasion of Ukraine in 2022. When international sanctions were imposed on Moscow, it started selling oil at a discount and India became a big buyer. That took market share away from the Middle East.

“We broadly see a decline in exports to India from Russia with other suppliers picking up exports to offset this,” Jay Maroo, a Vortexa analyst in Dubai, told AGBI.

Russia’s share of the Indian oil imports has fallen from 40 percent in November to less than 30 percent in January and 19 percent for the first part of this month, according to Vortexa.

Arab oil producers, including the UAE, have been working on strengthening energy ties with India and recovering market share.

Indian state refiners usually buy Russian barrels in the spot market but saw a shortfall in Russian oil shipments in December.

Another factor contributing to the decline in Russian oil to India was increased competition from Chinese buyers, especially for Russia’s Sokol and ESPO Blend, according to Vortexa.

“As a result, no cargos of these grades made their way to India in November and December,” said Rohit Rathod, Vortexa senior oil market analyst.

This trend strengthened in January as Washington tightened sanctions on Russia’s energy companies and on operators of vessels transporting oil, causing tanker freight rates to soar. Buyers and ports in China and India avoided sanctioned ships as a result.

Additionally, India has pledged to co-operate with international sanctions to avoid the risk of secondary sanctions on Indian entities.

"We play by the rules. If there is an international sanction, which is anchored, we would not want to go around it or anything," India's minister of petroleum and natural gas Hardeep Singh Puri told CNBC last week.

Pavel Sorokin, Russia's first deputy energy minister, said last week that US sanctions on Russia should not affect Moscow's oil trade with India.

Later this year, spot imports of Russian oil to India may recover “via the increased use of non-sanctioned vessels,” according to Vortexa.

“We expect this slowdown in Russian imports to be temporary and volumes to recover,” Rathod said.

“In 2025, India’s overall crude imports should see stronger growth from the start-up of refinery projects.”