DISCOUNTED RUSSIAN CRUDE - ECONOMY
News: Discounted
Russian crude imports saved Indian refiners $7 bn
What's in the news?
● Indian refiners saved at
least $7.17 billion in foreign exchange
in the 14 months that ended May 2023 by ramping up purchases of discounted
Russian crude oil following the outbreak of the war in Ukraine.
Key takeaways:
● India, the world’s
third-largest consumer of crude oil, depends
on imports to meet over 85 percent of its oil needs.
● With
Western buyers cutting oil imports from Russia in the wake of its February 2022
invasion of Ukraine, Moscow has been offering discounts on its crude.
● Indian
refiners have been lapping up these discounted barrels, so much so that Russia,
which used to be a marginal player in India’s oil trade, is now New Delhi’s
biggest oil supplier.
Total oil imports:
● The
total value of India’s oil imports for the 14-month period from April 2022 to
May 2023 was $186.45 billion.
Russia's share:
● Russian crude
accounted for 24.2 percent of India’s oil imports totaling 280.41million-tonnes,
or 2.06 billion barrels, in the 14 months to May.
● During
the period, Russia displaced traditional heavyweights like Iraq and Saudi
Arabia to emerge as India’s largest supplier of crude.
● Iraq
was the second-biggest supplier with a market share of 21 percent by volume,
followed by Saudi Arabia with a 16.4
percent share.
● The
UAE was the fourth-biggest supplier
of crude to India during the period.
Discount of Russian oils:
● Compared
to the next five major suppliers of crude to India during the 14-month period,
the landed price of Russian oil was at discounts ranging between 10 percent –
in the case of Iraq – and 22.1 percent – in the case of the UAE.
● The
share of Russian crude in India’s oil import basket has been rising
continuously for over a year and has been hitting fresh highs for the past few
months.
Recent plunge of Russian oils:
● In
May, Russian crude accounted for 40.4
percent of India’s total oil import volumes, followed by Iraq with a market
share of 18.3 percent, and Saudi Arabia with a share of 12.2 percent.