Russia’s share of the Indian oil market is growing at the expense of Saudi imports, Bloomberg has reported, noting Russian oil has been selling at a sizeable discount to Saudi crude.
Russia became the second-biggest oil supplier to India in June, after Iraq, which remained the biggest oil supplier to the subcontinent.
India and China became key markets for Russian oil after the Ukraine invasion as Europe began to wind down its purchases. The EU plans to suspend almost all imports of Russian crude and fuels by the end of the year, when an embargo will come into effect.
China and India, however, have only been too happy to absorb some of the crude that Europe is shunning, with both Asian giants dependent on imports for their energy consumption. As of July, the two accounted for 55 percent of Russian seaborne oil exports.
The change in oil sourcing has been particularly marked in India, which relies on imported crude for some 85 percent of its consumption. Last year, Russia was far from the top suppliers of the subcontinent: it ranked ninth. Now, thanks to the cheaper Russian crude, things look very different.
“Indian refiners are going to try and get their hands on the cheapest crude possible that works with their refinery and product configurations,” Bloomberg quoted oil market analyst Vandana Hari as saying.
In May, according to Bloomberg calculations, Russian oil sold for $19 less per barrel than Saudi crude, which narrowed in June to $13 per barrel.
“Russian crude fits that bill for now. The Saudis and Iraqis are not entirely losing out because they are directing more supply to Europe,” Hari added.
Indeed, Middle East oil producers were the natural alternative for European buyers, along with U.S, producers, as the buyers sought to replace Russian crude.