India's June Oil Imports from Russia Surge to Highest Since Last Year

In June, Indian refiners imported a total of 2.13 million barrels per day (bpd) of Russian crude oil, reaching the highest level since May of the previous year. This surge is attributed to the highest-ever import volumes of Russia's key crude grade Urals. The increased availability of Russian crude for export markets, due to Ukrainian drone strikes on Russian refinery infrastructure and a significant price differential compared to Middle Eastern crude grades, has led to higher flows of Russian oil to India in recent months.

The rise in India's import of discounted Russian oil has notably impacted imports from Saudi Arabia. In June, the import volumes from Riyadh fell to the lowest monthly level in over a decade. According to provisional ship-tracking data from commodity market analytics firm Kpler, India's Russian oil imports in June were 7.2% higher than the previous month, accounting for as much as 45% of India's total oil imports for the month. In contrast, oil imports from Saudi Arabia, India's third-biggest source market for crude, declined over 25% sequentially to 0.41 million bpd, the lowest in over 10 years. The primary reason for this decline is the ample availability of Russian crude and its continued price advantage over Saudi oil.

Before the war in Ukraine, Iraq and Saudi Arabia were the top suppliers of crude oil to India. However, as the West began to reduce its dependency on Russian energy supplies following Moscow's February 2022 invasion of Ukraine, Russia started offering discounts on its crude. Indian refiners took advantage of these discounted barrels. As the world's third-largest consumer of crude oil with an import dependency level of over 85%, India is highly sensitive to oil prices. Although trade sources indicate that discounts on Russian crude have shrunk over the past months, Indian refiners remain eager to buy Russian oil. Given the high import volumes, even smaller discounts lead to significant savings for India.