Photo by Aditya Kumar on Unsplash
India emerged as the top importer of Russian oil in July, surpassing China, according to Reuters. The change comes as Chinese refiners reduced their intake due to shrinking profit margins from fuel production, highlighting a notable trend in the global energy market.
Russian crude accounted for an unprecedented 44% of India’s total oil imports last month, reaching a new high of 2.07 million barrels per day (bpd). This represents a 4.2% increase from June and a 12% rise compared with the same period last year, based on trade and industry sources tracking Indian shipments. In contrast, China’s oil imports from Russia in July stood at 1.76 million bpd, according to Chinese customs data.
The surge in Indian imports is largely attributed to the availability of discounted Russian oil, which has become more accessible since Western countries imposed sanctions on Moscow in response to its invasion of Ukraine. These sanctions have forced Russia to redirect its energy exports, with India taking full advantage of the favourable prices.
An Indian refining source noted that the country’s demand for Russian oil is likely to grow further unless there is a significant tightening of sanctions.
India’s overall trade with Russia has expanded since the onset of the Ukraine conflict in February 2022, driven mainly by increased imports of oil and fertilizers. This trade dynamic has helped stabilize global prices and curb inflation.
The growing demand from India is also reshaping the market for Russian ESPO Blend crude, traditionally favoured by Chinese buyers. In July, ESPO imports to India surged to 188,000 bpd, facilitated by the use of larger Suezmax vessels.
Typically, refiners in north-eastern China are the primary buyers of ESPO crude due to their proximity, but a decline in fuel demand has led to reduced purchases.
Meanwhile, Iraq maintained its position as the second-largest oil supplier to India in July, followed by Saudi Arabia and the United Arab Emirates. India’s crude oil imports from the Middle East increased by 4% last month, boosting the region’s share of India’s overall oil mix to 40%, up from 38% in June, according to the data.