India lowers buying of Russian crude by 4% in October, steps up Saudi imports

India's crude oil imports from Russia saw a decline of over 4 per cent in October, compared to the previous month, as per data from the energy cargo tracker Vortexa. The reduction in imports from Moscow, a significant supplier to the nation, comes at a time when discounts on Russian oil have been narrowing, causing payment issues for Indian refiners due to the cost of oil exceeding the price cap.

In October, India imported 1.55 million barrels per day (bpd) of crude oil from Russia, down from 1.62 million bpd in the previous month. Despite this decrease, Russian oil still accounted for almost 34 per cent of India's total crude oil imports for the month.

It is worth noting that Russia retained its position as the top supplier of crude oil to India, marking a year of consistently being the leading crude oil supplier to the nation. Russia's emergence as a major source of crude oil for India started after Moscow sent troops to Ukraine in February 2022, surpassing Saudi Arabia and Iraq to become India's primary supplier by October 2022.

The increase in Russian oil exports to India was facilitated by Russia's pivot toward Asian markets, particularly India and China, offering discounted rates after the imposition of sanctions by the European Union (EU) and the United States following the invasion of Ukraine. However, in recent months, these discounts have decreased, pushing the cost of oil above the $60 per barrel price cap.

India's significant discounts on Russian Urals, a sour grade of crude, which constitutes a significant portion of imports, have impacted the situation. In October, India imported 1.39 million bpd of Russian Urals, up from 1.16 million bpd in the previous month.

In response to these changes in the crude oil market, India has increased its imports from Saudi Arabia. In October, India received shipments of 924,000 barrels per day from Saudi Arabia, a substantial increase from the 523,000 bpd recorded a month earlier.

Iraq, another key supplier, saw its crude oil exports to India decline in October, with 786,000 bpd compared to 946,000 bpd the previous month. Overall, India's total crude oil imports for October amounted to 4.56 million bpd, with sources including Russia, Saudi Arabia, Iraq, the United States, and various African nations.

The dynamics of India's crude oil imports have been evolving, influenced by geopolitical events, pricing, and shifts in global supply. It remains to be seen how these trends will continue to shape India's energy landscape vis a vis its foreign policy in the coming months.