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India increases oil imports from Russia, US: Is New Delhi reducing dependence on West Asia?
Amid turbulence in West Asia, India is looking to reduce its dependence on oil from the region. Though crude prices dropped today amid the announced ceasefire between Israel and Iran, oil prices spiked after the conflict began. But where is New Delhi, which is the third largest consumer of crude oil in the world and one of the biggest importers, looking to fulfil its requirements? read more
New Delhi is the third largest consumer of crude oil in the world and one of the biggest importers
India is looking at to reduce its dependence on oil from West Asia.
This comes amid the conflict between Israel and Iran.
Though oil prices have dropped today amid the ceasefire kicking in, oil prices had initially spiked after Israel conducted airstrikes on Iran.
Israel had previously attacked Iran's oil and gas infrastructure including the South Pars gas field i t jointly owns with Qatar.
But how is India looking at alternative places to get oil?
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Let's take a closer look
Oil prices surged after Israel's airstrikes
First, let's briefly look at how oil prices had spiked in the wake of Israel's attack on Iran.
Oil prices had spiked 14 per cent after Israel attacked Iran on June 13.
The price of oil eventually settled seven per cent higher at $73 (Rs 6,200) per barrel.
Experts had worried that strikes on Iran – the third-largest producer of crude oil within Organisation of the Petroleum Exporting Countries (Opec) – could disrupt flow of crude oil to the rest of the world particularly Asia.
They warned that oil could trade as high as $80 (Rs 6,882) per barrel if Iran followed through on its threat to shut the Strait of Hormuz – a narrow channel between Iran and Oman that nearly a fifth of global oil passes through on its way around the world.
However, that didn't happen.
Instead, crude oil hit as high as $77.08 (Rs 6,631) per barrel on Thursday before prices began sliding downwards.
Even as Iran hit a US base in Qatar on Tuesday, oil prices were at $69.48 (Rs 5,977) per barrel.
The Strait of Hormuz is a narrow waterway wedged between Iran and Oman. It is considered a major global oil choke point. Experts warn that shutting it down could have serious consequences. Reuters
Now, Trump has announced a 'complete and total' ceasefire between the two nations for which he has credited Qatar.
While Iran's foreign minister Seyed Abbas Araghchi initially denied reports of a ceasefire, the country has since admi tted it has no intention of continuing its attacks on Israel.
India, meanwhile, isn't wasting time.
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New Delhi, the third largest consumer of crude oil in the world and one of the biggest importers, is already eyeing alternative sources to meet its crude oil requirements.
India examining alternative sources for oil
India already imports oil from Russia, Saudi Arabia, Iraq and the UAE.
New Delhi has made a concerted effort in recent months to increase its purchases of crude oil from Moscow.
Russian crude comprised around 39 per cent of India's oil imports in April and May.
In May, India purchased 1.96 million barrels of crude oil from Russia every day.
India's oil imports from Russia are already more than its combined purchases from Iraq and Saudi Arabia.
Russia sends its crude oil to India via the Suez Canal, Red Sea route, the Cape of Good Hope and the Pacific Ocean.
India has saved billions of dollars by purchasing Russian crude oil – which is facing sanctions from the West – in the last financial year. Reuters
Exporters in June are expected to purchase around 2.2 million barrels of crude oil per day from Russia in June.
India will likely increase its purchases from Russia even more in July if the turmoil in West Asia continues.
Sumit Ritolia, Lead Research Analyst, Refining & Modeling, at Kpler, told _Indian Expres_s, 'June reinforces a well-established precedent – Russian crude volumes…continue to dominate India's import slate due to attractive pricing, logistics detached from the Gulf, and payment flexibility in non-dollar currencies. Looking ahead, if geopolitical risks worsen or maritime security around Hormuz deteriorates, Indian refiners are expected to ramp up spot purchases from Russia, West Africa, Latin America, and the US. This will likely translate into a decline in July nominations for Middle Eastern cargoes, particularly from Iraq and Saudi Arabia.'
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India prior to the Ukraine war imported just two per cent of its crude oil from Russia.
By 2024, New Delhi had imported around 36 per cent of its crude oil from Moscow.
This, even as it reduced its dependence on Saudi Arabia, the UAE and Kuwait.
India has also saved billions of dollars by purchasing Russian crude oil – which is facing sanctions from the West – in the last financial year.
Russia was offering India a hefty $30 discount on crude oil in 2022 when the war began.
That discount was at $5 per barrel on its crude oil in 2024.
India has other options too including the United States, Nigeria, Angola and Brazil.
India in June bought around 439,000 barrels per day from the United States.
That figure was at just 280,000 barrels per day in May.
As Sumit Ritolia, Lead Research Analyst, Refining & Modeling at Kpler, said, 'If conflict deepens or there is any short-term disruption in Hormuz, Russian barrels will rise in share, offering both physical availability and pricing relief. India may pivot harder toward the US, Nigeria, Angola, and Brazil, albeit at higher freight costs.'
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With inputs from agencies
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