In a significant shift in global energy trade, India has overtaken China to become the top importer of Russian oil as of July 2024. This change in dynamics comes as China faces diminishing profits from oil refining, leading to a reduction in its purchases of Russian crude.
Key Statistics
India’s imports of Russian oil have surged, with Russian crude accounting for a record 44% of India’s total oil imports in July 2024. The country imported 2.07 million barrels of Russian oil per day during the month, marking a 4.2% increase from June and a substantial 12% rise compared to July 2022. In contrast, China’s imports of Russian oil dropped to 1.76 million barrels per day, signaling a notable decline.
Driving Factors
India’s ascent to the top spot is primarily driven by several key factors:
- Competitive Pricing: The availability of Russian oil at lower prices has been a major draw for India. The discounts on Russian crude have been influenced by sanctions imposed by Western countries in response to Russia’s invasion of Ukraine. These sanctions have pressured Russia to seek alternative markets, offering attractive deals to countries like India.
- Consistent Demand: India’s steady demand for Russian oil, buoyed by the favorable pricing and geopolitical considerations, has further cemented its position as a leading buyer. As long as Western sanctions remain in place, this trend is expected to continue, ensuring a reliable supply of affordable crude for India.
Trade Patterns
Since February 2022, when Russia’s invasion of Ukraine triggered a wave of international sanctions, India has significantly ramped up its purchases from Russia, particularly in oil and fertilizers. This increase in trade has played a crucial role in stabilizing global oil prices and controlling inflation. Notably, Russian ESPO Blend crude, which was predominantly shipped to China in the past, is now finding its way to India in increasing quantities. In July, imports of this crude variety rose to 188,000 barrels per day, facilitated by the use of larger Suezmax vessels.
Regional Supply Trends
With this shift in trade dynamics, Iraq has now become India’s second-largest oil supplier, followed by Saudi Arabia and the UAE. Additionally, India’s overall oil imports from the Middle East saw a 4% increase, raising the Middle East’s share of India’s oil imports from 38% to 40%. This diversification in supply sources reflects India’s strategic approach to securing energy resources while navigating the complexities of global energy markets.
India’s emergence as the top importer of Russian oil underscores the country’s growing influence in global energy trade and its ability to adapt to changing geopolitical landscapes. As the world continues to grapple with the economic fallout of the Ukraine conflict, India’s strategic decisions in the energy sector will likely play a crucial role in shaping the future of global oil markets.