India’s reliance on Russian crude oil experienced a notable downturn in February, with imports dropping by 19% compared to the previous month. Despite this decline, Russia retained its position as the largest supplier of crude oil to India, accounting for $3.61 billion worth of supplies. In January, India’s oil imports from Russia stood at $4.47 billion, indicating a substantial decrease in February.
The month-on-month decline is attributed to lower discounts offered by Russia, which has historically been the primary source of crude for India since the onset of western sanctions following its invasion of Ukraine in February 2022. Russia’s decision to scale back discounts has impacted its export volumes to India, leading to a reduction in import figures for February. The deep discounts previously offered by Russia had positioned India and China as the primary beneficiaries, with discounts exceeding $30 per barrel in 2022. However, these discounts have gradually diminished over the past year, now averaging less than $5 per barrel. Amidst Russia’s diminished discounts and declining exports to India, Saudi Arabia has emerged as a significant player in the Indian oil market. As Russia’s oil exports to India faltered, Saudi Arabia stepped in to fill the gap, solidifying its position as the second-largest supplier of crude oil to India.
The shift in oil dynamics underscores the evolving landscape of India’s energy imports, with Saudi Arabia capitalising on opportunities arising from fluctuations in Russian supply. While Russia continues to navigate the repercussions of geopolitical tensions and international sanctions, India’s diversification of oil sources highlights its adaptability to changing market conditions and strategic energy planning. As India navigates the complexities of global energy markets, the balance between traditional suppliers like Russia and emerging players like Saudi Arabia will shape the country’s energy security and economic resilience in the years to come. The diversification of oil sources and strategic partnerships will be essential for India to mitigate risks and ensure a stable and sustainable energy future.
