In a significant shift in global energy flows, India’s dependence on the Organization of the Petroleum Exporting Countries (OPEC) for its oil imports has seen a sharp decline. Reports suggest that India’s oil imports from OPEC dropped to 46% in April from 72% a year ago as refiners increased the number of discounted Russian shipments. This change in India’s oil import policy underlines the shift in global energy flows triggered by Moscow’s invasion of Ukraine in February 2022.
It is noteworthy that India’s Russian oil imports are now more than the shipments from Iraq and Saudi Arabia, the largest suppliers in the last decade when OPEC accounted for 90% of the total crude bought by Indian refiners. Russian oil’s share spiked from less than 1% before the Ukraine conflict as refiners lapped up heavily discounted barrels shunned by the West in retaliation to Moscow’s military move.
According to shipping market trackers, Russia has remained India’s largest oil supplier for the seventh straight month in April. Russian oil’s share in India’s imports rose to 36% at 1.6 million barrels/day, while OPEC accounted for 2.1 million barrels/day out of 4.6 million barrels/day imported in April. This marks a significant decline in OPEC’s share, which was 90% a decade ago.
The trend has continued in the month of March as well, with Russian oil imports doubling to 1.64 million barrels/day as compared to 0.81 million barrels/day bought from Iraq, which had been India’s top supplier since 2017-18. Saudi Arabia, which was India’s second-largest supplier in the past, has slid to the third position with 0.67 million barrels/day.
The UAE, which in March overtook the US to become the fourth-largest supplier, sold 185,000 barrels/day, higher than 119,000 bpd from the US. Reports suggest that month-on-month purchases from Russia rose marginally from 1.64 million barrels/day imported in March.
The shift in India’s oil import policy can be attributed to a few factors, with the most prominent being the discounted rates offered by Russia. Indian refiners have been purchasing heavily discounted barrels from Russia, which has helped them reduce costs and diversify their oil imports. This diversification has helped India reduce its dependence on OPEC, which has been a major supplier of crude oil to India for decades.
Moreover, the geopolitical tensions between Russia and the West have resulted in western nations imposing sanctions on Russia, which has led to Russia’s increased dependence on Asian nations like India. The country has been looking to expand its market share in the region, and the discounted rates have proved to be an attractive proposition for Indian refiners.
This shift in India’s oil import policy has significant implications for the global energy market, with Russia’s increased dominance in the region affecting the balance of power between OPEC and non-OPEC nations. It is also a reflection of the changing dynamics of global politics and the impact that geopolitical tensions can have on global trade and energy flows.
Instead, Indian refiners have been increasing the number of discounted Russian shipments, which has led to OPEC’s share in India’s oil imports falling to 46% in April from 72% a year ago. The shift in India’s oil import policy is attributed to several factors, including discounted rates offered by Russia and geopolitical tensions between Russia and the West.
The trend is likely to continue in the near future, with reports suggesting that Indian refiners are looking to increase their imports from non-OPEC nations like Russia and the US. While this shift may be beneficial for Indian refiners in the short term, it remains to be seen how it will impact the long-term dynamics of the global energy market. It is clear, however, that the balance of power is shifting, and non-OPEC nations like Russia are playing an increasingly important role in global energy flows.
