India is actively pursuing a strategy to reduce its reliance on Russian crude oil, pivoting back to its traditional Middle Eastern trading partners who are offering more competitive pricing. This shift in energy procurement is driven by changing market dynamics and India’s desire to secure cost-effective oil supplies.
Indian Oil Minister Hardeep Puri announced that the country is planning to significantly decrease its dependence on Russian crude oil, primarily because Middle Eastern oil prices have become more appealing in comparison.
The report reveals that India had increased its consumption of Russian crude oil following the Russian invasion of Ukraine in February 2022, surpassing its reliance on Saudi Arabia and Iraq, which were historically major oil exporters to India. In May, nearly half of India’s oil imports came from Russia, a significant increase from previous modest volumes.
However, surging oil prices have affected the price competitiveness of Russian crude oil. Consequently, India is now considering alternatives from other countries with more favorable terms, while Russia has also announced plans to restrict oil exports.
Data from Kpler, a commodity market analytics firm, indicates that in August, Indian oil imports from Russia experienced a third consecutive monthly decline, dropping to 1.57 million barrels per day, representing a 24% decrease month-on-month. This marked the lowest import level since January, despite Russia maintaining its position as India’s leading oil exporter.
Furthermore, the data highlights a strategic shift in India’s oil procurement preferences. Refiners in the country reduced their demand for Iraqi oil by 10% in the past month, down to 848,000 barrels per day. Simultaneously, Saudi Arabian oil imports increased substantially by 63% month-on-month, reaching 852,000 barrels per day.
India’s efforts to diversify its sources of oil supply are driven not only by economic considerations but also by a desire to ensure energy security and flexibility in a volatile global energy landscape. As it navigates these challenges, India’s strategic decisions in the energy sector will play a significant role in shaping its future economic and geopolitical positioning.