India has surpassed China to become the world's largest importer of Russian oil in July, according to recent import data. This shift occurred as Chinese refineries reduced their oil purchases due to declining profit margins from fuel production. In July, Russian crude oil accounted for a record 44 per cent of India’s total oil imports, reaching an unprecedented 2.07 million barrels per day (bpd). This figure represents a 4.2 per cent increase compared to June and a 12 per cent rise from the same period last year. In contrast, China’s oil imports from Russia, including both pipeline supplies and shipments, totalled 1.76 million bpd in July, based on data from Chinese customs, as per news agency Reuters.
This development shows India's growing reliance on Russian crude, driven by the economic benefits and strategic decisions made by Indian refiners. The increase in imports underscores a shift in global energy trade dynamics, with India emerging as a key player in the oil market. Indian refiners have been gorging on Russian oil sold at discounts after Western nations imposed sanctions against Moscow and curtailed their energy purchases in response to Russia’s invasion of Ukraine.
Did India's trade with Russia increase?
“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 said, as per Reuters. India’s trade with Russia has increased since Russia began its war against Ukraine in February 2022 mainly because of oil and fertiliser imports, a move helping to keep a lid on global prices and controlling inflation.
India's imports of ESPO crude
India's increasing oil purchases are reshaping the flow of Russian ESPO Blend crude, traditionally favoured by Chinese buyers, towards South Asia. In July, India's imports of ESPO crude surged to 188,000 barrels per day (bpd), facilitated by the use of larger Suezmax vessels, according to the data. Typically, refineries in northeast China are the primary consumers of ESPO due to their geographic proximity, but their demand has declined amid sluggish fuel demand.
Despite India's growing imports from Russia, Iraq maintained its position as the second-largest oil supplier to India in July, followed by Saudi Arabia and the United Arab Emirates. Additionally, India's crude oil imports from the Middle East rose by 4 per cent in July, increasing the region's share of India's overall oil supply to 40 per cent, up from 38 per cent in June, according to the data.
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