India has emerged as the world’s largest importer of Russian oil, overtaking China in July, according to recent import data. This shift comes as Chinese refiners reduced their purchases due to lower profit margins on fuel production.
Record-Breaking Imports
In July, Russian crude accounted for a record 44% of India’s total oil imports, reaching 2.07 million barrels per day (bpd). This represents a 4.2% increase from June and a 12% rise compared to the previous year. This surge in Indian imports surpassed China’s July oil imports from Russia, which were recorded at 1.76 million bpd through pipelines and shipments, based on Chinese customs data.
Shift in Supply Chains
India’s increased demand for Russian oil is attributed to discounted prices following Western sanctions on Moscow in response to its invasion of Ukraine. “India’s requirement for Russian oil is going to go up as long as there are no further tightening of sanctions,” an Indian refining source commented. This growing demand has shifted the flow of Russian ESPO Blend crude, traditionally bought by Chinese refineries, to South Asia. In July, imports of ESPO Blend to India surged to 188,000 bpd, aided by the use of larger Suezmax vessels.
Impact on Trade Patterns
India’s trade with Russia has intensified since February 2022, largely driven by oil and fertilizer imports. This has helped moderate global prices and manage inflation. As a result, the flow of Russian oil is increasingly directed towards Indian refiners, altering traditional supply routes.
Middle East Remains a Key Supplier
Despite the rise in Russian oil imports, Iraq remained India’s second-largest oil supplier in July, followed by Saudi Arabia and the United Arab Emirates. Indian crude purchases from the Middle East increased by 4% in July, raising the region’s share in India’s overall oil imports to 40%, up from 38% in June.
This shift underscores the changing dynamics in global oil trade, with India playing an increasingly significant role in the global energy market.