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India's crude oil imports shifted in December as Russian supplies fell, boosting Iraq and UAE exports, driven by cost efficiency and shifting global dynamics.

Oil Import

India is the world's second-largest importer of crude oil, after China. The top five countries from which India imports oil are Russia, Iraq, Saudi Arabia, the United Arab Emirates (UAE), and the United States. 

Reasons for oil imports

• Growing population and industrialization have increased its energy needs. 
• Rapid economic growth is expected to increase its energy demand. 
• India's petroleum reserves are not enough to meet its demand. 
• Increasing oil prices can widen India's trade deficit. 

Trend in Oil Import

India increased crude oil imports from Iraq and the UAE in December 2024 due to reduced supplies from Russia. 

Russian exports dropped as its domestic refineries operated at high capacity to meet seasonal demand. This led Indian refiners to seek alternatives that matched the quality of Russian crude, benefiting Iraq and the UAE.

India's imports of Iraqi crude oil surged by nearly 29% in December, reaching 1.13 million barrels per day (bpd). This accounted for 24% of India's overall oil imports, up from 18.7% in November. Iraqi Basrah Medium crude, similar in quality to Russia’s Urals, became a favoured choice for Indian refiners.

The UAE’s crude oil exports to India grew significantly in December, hitting nearly 530,000 bpd—the highest in 32 months. This marked a 22.1% increase compared to November, raising the UAE's share in India’s oil imports to 11.2% from 9.2%.

Why couldn’t Saudi Arabia capitalize on the reduced Russian exports?

The average landed price of Saudi Arabia’s Arab Light crude was $2.5 per barrel higher than Dubai crude. In comparison, Russian Urals were $3 per barrel cheaper than Dubai crude, making them more attractive to Indian refiners.

Will India continue to depend on Middle Eastern oil in the near term?

Experts suggest that Russia’s domestic demand will continue to constrain its exports, prompting Indian refiners to source oil from Iraq, the UAE, and other Middle Eastern countries until Russian exports normalize.

Price differences significantly impact India’s choices

Russian Urals crude has been cheaper than both Saudi Arabia’s Arab Light and Iraq’s Basrah Medium grades. Even small discounts on Russian crude result in substantial savings for India, given its high import dependency of over 85%.

What might happen when Russian refinery maintenance begins in spring?

When Russia's spring refinery maintenance season begins around March-April, exports are expected to rise. This could lead to a rebound in India’s imports of Russian crude to earlier levels of 2 million bpd. Until then, India will continue diversifying its crude oil sources.

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Source: 

Indian Express