Why is India thirsty for Russian oil?

MUMBAI: India buys, refines and sells crude oil at a discount from Russia and has become a major supplier to Europe as Moscow’s war with Ukraine restructured global fuel flows for more than a year.

New Delhi has decided to resist Western pressure to freeze Moscow and instead strengthen trade ties with its longtime ally, with the added benefit of mitigating inflation while saving money.

How much is India buying Russian oil?

India is the world’s third-largest consumer of crude oil, after the United States and China, and imports 85% of its needs.

Previously, the main suppliers were in the Middle East. Russia is now number one.

In the case of isolated Moscow, India and China have become its best customers.

According to the International Energy Agency (IEA), India imported 1.62 million barrels per day from Russia in March, which is equivalent to 40% of its total oil imports.

On Wednesday, Russian energy giant Rosneft announced a deal to “substantially increase” its supply to state-owned Indian Oil Company following CEO Igor Sechin’s visit to India.

Did buying Russian oil help Indians pay less for fuel?

India saved $3.6 billion by importing crude from Russia at discounted prices in the 10 months after the war broke out, a member of parliament said in December.

Savings likely increased after Energy Cargo Tracker reported that India was buying Russia’s flagship Ural crude, well below the US$60-per-barrel price cap introduced by the G7 in December.

“As the world’s third-largest consumer of oil and gas and a low-income consumer, it is our fundamental duty to ensure that Indian consumers have maximum access to the international market on the most favorable terms.” S. Jaishankar, Foreign Minister of India spoke in Moscow in November.

What about Russian oil in India?

India has 23 refineries that refine 249 million tonnes of oil per year, making it the fourth largest refinery in the world.

Asia’s wealthiest Mukesh Ambani’s Reliance Industries operates the world’s largest oil refinery in Gujarat and has increased its Russian oil purchases there.

Along with Nayara, India’s second-largest refiner, which is 49% owned by Russia’s Rosneft, Reliance imports 45% of Russian crude entering India, according to data from cargo tracking firm Vortexa.

Then go back west?

Most of the refined products are delivered to Indian consumers.

But thanks to the surplus, India has emerged as a major supplier of gasoline and diesel (some refined from Russian crude).

India’s oil product exports to the European Union rose 20.4 per cent year-on-year to 11.6 million tonnes between April and January, with India Express daily reporting, citing official data, that Indian refiners are seeing “strong margins”. is enjoying, he added.

How is this allowed?

Despite the sanctions against Moscow, this is not against European Union rules as the refined product is not considered to have come from Russia.

It also helps blocks avoid supply problems, which will boost prices for consumers already reeling from rapid inflation.

David Wech, chief economist at Vortexa, told AFP that “the world will have a very difficult time living without Russian oil” and that a complete shutdown of Moscow would result in a “deep recession”.

According to a Bloomberg report released in February, as Europe tightens sanctions, India’s role “will become more central on the world oil map redrawn by Vladimir Putin’s year-long war in Ukraine.”

Despite India’s purchases, Russia still earns less from oil exports than it did before the invasion. Partly because of the extra costs and difficulties of getting insurance to transport crude oil halfway around the world.

“There’s a certain beauty to it, if I can call it that,” said Wech.