India’s Oil Imports Surge to 10-Month High: Russian Supplies Soar as Saudi Flows Dwindle

Indian oil imports from Russia reached a 10-month high in May, driven by a combination of factors including reduced refinery capacity in Russia due to Ukrainian drone strikes and favorable pricing dynamics. This surge in imports, based on comprehensive analysis of oil tanker tracking data and expert insights from the industry, has notably impacted flows from traditional suppliers like Saudi Arabia, with Indian refiners increasingly opting for discounted Russian oil over Saudi supplies.

According to provisional ship-tracking data from commodity market analytics firm Kpler, Indian refiners collectively imported a total of 1.96 million barrels per day (bpd) of Russian crude in May. This marked a significant increase of nearly 3% from April and represents the highest volume of Russian crude imported by India since July of the previous year. The consistent growth in India’s Russian oil imports over the past few months underscores the country’s growing reliance on Russian oil amid evolving market conditions.

Conversely, oil imports from Saudi Arabia, historically one of India’s primary crude suppliers, witnessed a notable decline in May. Imports from Saudi Arabia fell by almost 13% sequentially to 0.55 million bpd, reaching their lowest level since September of the previous year. The primary reason behind this decline can be attributed to the availability of ample Russian crude, which continues to maintain a significant price advantage over Saudi oil in the global market.

Viktor Katona, head of crude analysis at Kpler, highlighted that the decrease in Russian refinery runs due to Ukrainian drone strikes resulted in surplus crude available for export markets. Consequently, Indian refiners have strategically minimized imports from Saudi Arabia, opting instead for the cost-effective Russian barrels. This commercial decision reflects the prevailing market dynamics and underscores the competitiveness of Russian crude in meeting India’s demand.

The record-high supply of the medium-sour Urals crude, Russia’s flagship grade, played a pivotal role in driving India’s Russian oil imports to new heights in May. Urals crude accounted for over 78% of India’s total Russian oil imports, underscoring its preference among Indian refiners. The significant price advantage of Urals crude over competing grades from traditional West Asian suppliers has made it an attractive choice for Indian refiners, contributing to the surge in imports.

Additionally, May witnessed a notable increase in India’s oil imports from the United States (US), marking a 10-month high. Indian refiners imported a total of 0.21 million bpd of crude from the US, representing a 4.5% increase from April. This uptick in US imports can be attributed to American crude becoming relatively cheaper compared to West Asian grades, further diversifying India’s crude oil sourcing portfolio.

In terms of market share, Russia consolidated its position as a dominant crude supplier to India, accounting for almost 41% of the country’s total crude oil imports in May. This marked the second consecutive month of Moscow’s share exceeding 40% in India’s oil imports, indicating a significant shift in sourcing patterns. Meanwhile, Iraq remained India’s second-largest source of crude, accounting for a fifth of total imports, while Saudi Arabia’s share stood at 11.4%.

Overall, the surge in Indian oil imports from Russia, coupled with shifting dynamics in global oil markets, underscores the complexities and nuances of India’s crude oil sourcing strategy. As geopolitical tensions and market dynamics continue to evolve, India’s strategic decisions in crude oil procurement are likely to remain closely watched by industry observers and market participants alike.