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Context: India's rising imports of Russian oil.

Details

• India's oil imports from Russia reached a record high of approximately 1.95 million barrels per day (bpd) in May.
• India, as the world's third-largest oil consumer and importer, heavily relies on imported oil, with more than 80% of its oil sourced from overseas.
• The increase in imports from Russia is attributed to sanctions imposed on Moscow following its invasion of Ukraine.

Impact on Crude Imports

• Russian oil accounted for around 40% of India's crude oil imports in May, surpassing imports from Iraq and Saudi Arabia.
• Imports from Iraq dropped to a three-year low, while imports from Saudi Arabia reached their lowest level since September 2021.
• In May, India imported approximately 801,400 bpd of Iraqi oil, down 13.7% from April, and Saudi supply declined by 15% to 616,100 bpd.

Factors Driving Increased Russian Oil Imports

• Cost Advantage: Russian oil offers a competitive advantage due to its lower landed price compared to crude oil from West Asian countries.
• Price Comparison: In April, the landed price of a tonne of Russian oil was around $500, equivalent to $68.21 per barrel, whereas Iraqi oil cost $570 and Saudi Arabian oil cost $637.40 per barrel.

Long-Term Outlook

• Continued High Imports: India is expected to maintain high imports of Russian oil as its cost remains comparatively lower than West Asian crude.
• Impact on West Asian Suppliers: Due to increased purchases of discounted Russian oil, the share of imports from West Asia, which has traditionally been India's primary source, decreased to an all-time low of approximately 39% in May, down from 44% in April.

Economic Implications

• Cost Savings: Importing cheaper Russian oil can help India reduce its overall import expenditure and contribute to cost savings for Indian refineries.
• Diversification of Sources: The rising imports from Russia highlight India's efforts to diversify its sources of crude oil and reduce dependence on any single region.

Geopolitical Considerations

• Impact of Sanctions: India's increasing reliance on Russian oil reflects the consequences of Western sanctions on Moscow, shaping India's oil trade dynamics.
• International Relations: The shift in oil imports can have implications for India's relationships with oil-producing nations in the Middle East and Russia.

https://epaper.thehindu.com/ccidist-ws/th/th_delhi/issues/40658/OPS/GO5BCV7NC.1+GTKBCVN3C.1.html

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