MUMBAI — India’s imports of Russian crude oil fell in January to a one-year low, down 35% from last year’s peak, as New Delhi diversifies its sources.
India’s petroleum minister told Nikkei recently that the decline reflects a need to “supply energy at the cheapest price” to the public, referring to New Delhi’s price-focused approach to procurement.
“We are a democracy. We are answerable to our voters,” Hardeep Singh Puri said in an interview in the state of Goa alongside the India Energy Week exhibition.
India ramped up purchases of Russian oil after Moscow’s 2022 invasion of Ukraine, capitalizing on steep pricing discounts as a result of Western sanctions. Its imports grew from zero in January 2022, before the war, to 1.27 million barrels a day in January 2023, data from research firm Vortexa shows.
Russia was India’s largest oil supplier in 2023, accounting for around 30% of imports. The monthly tally peaked at 1.99 million barrels in July.
Indian Petroleum Minister Hardeep Singh Puri spoke with Nikkei in February on the sidelines of India Energy Week. (Photo by Ryosuke Hanada)But these purchases have declined recently, falling to about 1.29 million barrels a day last month. India now buys more from other suppliers such as Iraq than it did in July.
“We have already diversified” over the past two years, Puri said. “Today, we import crude from 39 countries.”
Asked about Russia’s expected share of India’s oil imports this year, the petroleum minister replied that it is “very difficult to say,” noting the figure had surged from 0.2% before coming back down.
“Maybe the other countries will give us more discount,” he said. “So much of this is subjective.”
The International Energy Agency forecasts India’s oil demand to rise around 20% between 2023 and 2030 to 6.6 million barrels per day.
Puri said that “India is one of the few market[s] that is growing so fast. Now everyone has an interest to supply more to India.”
Some observers see the drop-off in India’s imports from Russia as a sign that efforts by the U.S. and partners to tighten sanctions against Moscow are making a difference.
The Group of Seven and the European Union in December 2022 imposed a $60-per-barrel price cap on Russian oil, enforced by blocking access to insurance for shipments sold above that threshold. Washington last October sanctioned two vessels owned by companies in the United Arab Emirates and Turkey that violated this measure.
Moscow reportedly has used a “shadow fleet” of aging tankers to evade the shipping restrictions.
With Russia under financial sanctions as well, the Reserve Bank of India in 2022 set up a system to allow for settling trade payments in rupees. But use of this framework has been limited due to transactional and exchange rate risks, according to local media. India is believed to have paid for Russian crude largely in dollars or the UAE dirham.
India also has begun trading other commodities for oil. Part of last month’s payment was made in bananas, Russian media report, and in-kind payments with other types of fruit are reportedly on the table as well.
The sanctions have spurred Russia to pivot from the West to Asia as the main customer for its oil. Revenue from oil and gas jumped 59% on the year in January to about 680 billion rubles ($7.41 billion), Russia’s Finance Ministry reports.
Source : Nikkei Asia