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India’s dependence on Russian oil soars to 30%
India’s dependence on Russian oil has increased to account for 30% of its imported total in March, according to a Nikkei analysis of shipping data.
India, which had previously relied almost exclusively on the Middle East, imported more than 6 million tonnes of Russian oil last month. Western sanctions stemming from Moscow’s invasion of Ukraine have made oil from Russia relatively inexpensive, leading to the shift in procurement.
Nikkei analyzed British market research company Refinitiv’s maritime transport data as of April 14 for crude oil, fuel oil and refined petroleum products. Figures reflect the amount transported by tankers from Russian ports to their destination by the end of March.
The 30% dependence on Russian oil marked a new high for India since the Ukraine invasion. But the percentage is expected to increase further to 40% to 50% for April, including expected arrivals. In January 2022, Russia accounted for slightly under 2% of India’s imports.
China imported over 4.7 million tonnes of Russian oil in March, second only to India. China’s dependence on Russia reached 10%.
Russia’s benchmark Urals crude is currently hovering in the $62 range, 20% to 30% lower than the international benchmark North Sea Brent.
As part of Western sanctions introduced in December, the Group of Seven major economies and the European Union set a ceiling of $60 per barrel for the trading price of Russian crude oil.
If the oil is purchased at a price exceeding this ceiling, the sanctions restrict the necessary insurance policies for marine transportation. More than 90% of such insurance is provided by European companies.
With the number of buyers of its crude oil decreasing, Russia has been forced to sell at a discount to India, China and other countries not participating in the sanctions.
Russian exports of crude oil and petroleum products have returned to pre-invasion levels, according to an International Energy Agency report in April. India and China are offsetting the decrease in European imports. An analysis of the Refinitiv data shows that global imports of Russian oil in March totaled about 24.2 million tonnes, the highest since the Ukraine invasion.
For India, which is under pressure to cope with high inflation, there are advantages to procuring oil at a discounted price. According to the IEA, oil accounted for 25% of India’s energy consumption in 2020, second only to coal at 44%.
However, Russian oil takes as much as eight times longer to transport than Middle Eastern oil, making it difficult to respond flexibly to sudden increases in demand.
Price increases also pose a risk. Although India and China have not joined the sanctions, they face the prospect of international criticism for continuing to buy Russian oil above the $60 ceiling.
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