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India's Oil Imports Surge: Russia Hits Record High, Saudi Arabia Drops

India's oil imports from Russia reached an unprecedented high of approximately 2.1 million barrels per day (bpd) in May, driven by widening discounts on Russian oil due to decreased demand from China. This surge has pushed Russia's share in India's oil market to nearly 41%, solidifying its position as the top supplier to the world's third-largest oil importer and consumer.

Conversely, imports from Saudi Arabia plummeted to a 10-month low, attributed to Saudi Aramco's decision to raise term prices for the second consecutive month in May. India's overall oil imports in May grew by 5.6% from April, reaching about 5.1 million bpd, with Russian oil imports alone rising by 14.7% from the previous month and 5.9% from a year earlier.

Indian refiners have capitalized on discounted Russian crude, which has become more economically attractive than similar grades from the Middle East. The geopolitical ramifications of the Ukraine invasion have led many European nations to reduce their reliance on Russian oil, allowing India to secure these discounted supplies. This strategic shift not only ensures a stable supply for India but also helps reduce import costs.

Interestingly, India's broader oil import strategy includes increasing purchases from the United States. As of the fiscal year 2023-24, India has been importing more U.S. crude, diversifying its sources and enhancing energy security. This diversification comes at a significant economic advantage; India paid 16% less for the same volume of oil compared to the previous fiscal year, underscoring the financial benefits of a diversified import portfolio.

This increase in imports from Russia and the U.S. has also contributed to a broader trend in Asia, where strong Indian purchases have pushed the region's crude imports to a one-year high. This dynamic landscape highlights India's evolving energy strategy, balancing geopolitical considerations with economic pragmatism to secure its energy future.

India's record-high oil imports from Russia and increased purchases from the U.S. reflect a calculated approach to managing costs and ensuring supply stability amid fluctuating global market conditions.

By Julianne Geiger for Oilprice.com

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  • Mamdouh Salameh on June 21 2024 said:
    Between them China and India are currently importing an estimated 18.0 million barrels a day (mbd) or 24% of global traded oil with Russia accounting for 24% of the two countries imports.

    China and India have become the driving force behind global oil demand. Moreover, 84% of Chinese and Indian imports are settled in petro-yuan, rupee and ruble and only an estimated 17% in the US dollar.

    Globally 52% of traded oil is now conducted in currencies other than the dollar,

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert

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