India's imports of Russian oil hit 10-month high in May, shows data

Business Standard

03-06-2025

India's imports of Russian crude oil surged to a 10-month high of 1.96 million barrels per day in May, driven by continued availability at significant discounts compared to global benchmark prices, according to ship-tracking data from Kpler.
India, the world's third largest oil importing and consuming nation, bought from abroad around 5.1 million barrels of crude oil, which is converted into fuels like petrol and diesel in refineries.
Of this, Russia was the largest supplier, accounting for over 38 per cent of the supplies. Iraq maintained its position as the second-largest supplier, with 1.2 million bpd of sales to India.
Saudi Arabia exported 6,15,000 bpd, while the United Arab Emirates (UAE) supplied 4,90,000 bpd. The United States routed out the top five, delivering 2,80,000 bpd, underscoring India's push to diversify import sources and balance geopolitical exposure.
"Overall, India's crude import profile for May 2025 highlights its price-sensitive, diversified sourcing strategy. Russian volumes remain elevated despite external pressures, reinforcing the primacy of economic pragmatism in India's energy policy," said Sumit Ritolia, Lead Research Analyst, Refining & Modeling at Kpler.
India, which has traditionally sourced its oil from the Middle East, began importing a large volume of oil from Russia soon after the invasion of Ukraine in February 2022. This is primarily because Russian oil was available at a significant discount to other international benchmarks due to Western sanctions and some European countries shunning purchases.
This led to India's imports of Russian oil seeing a dramatic rise, growing from less than 1 per cent of its total crude oil imports to a staggering 40-44 per cent in a short period.
Ritolia said Russia continues to offer crude at notable discounts compared to benchmarks like Brent and Dubai or compared to Middle Eastern grades on a landed cost basis.
"The strong inflow of Russian barrels into India is driven by a combination of economic, operational, and geopolitical factors," he said.
A key advantage lies in the pricing of Urals crude from Russia, which, although not always steeply discounted, remains significantly cheaper than West African and Middle Eastern grades.
"This pricing edge has supported stronger refinery gross margins for Indian processors. For instance, in May, average FOB prices for Urals stood around USD 50 per barrel, comfortably below the USD 60 a barre; price cap set by Western allies," he said, adding this favourable pricing attracted substantial shipping capacity - at least 20 tankers, previously dedicated to non-sanctioned trades, were repurposed to transport Urals.
As a result, export volumes rose notably.
He saw Russian crude retaining a 3035 per cent share in India's import mix, especially if refining margins remain strong, FOB economics continue to be favourable, and sanctions remain limited in scope.
"However, there are some small headwinds to look at on the horizon. Kpler data suggests a modest rebound in Russian refinery throughput, potentially increasing by 1,00,000-3,00,000 bpd in the coming months. This could reduce Russia's export availability by a corresponding margin and may slightly temper flows to India post-May," he said.
India is likely to maintain a diversified crude basket, but Russian barrels will remain central to its import strategy - provided discounts persist and payment mechanisms remain viable, he added.
With the monsoon season approaching, some Indian refiners may reduce crude runs, which could temporarily affect imports, particularly of sweeter grades, he noted.
Crude exports from the Middle East to India are expected to retain a stable to slightly lower share in the near term, influenced by seasonal refinery patterns and continued competition from Russian supplies. Nonetheless, the region's long-term strategic reliability ensures that it remains an important component of India's supply chain.
When Russia invaded Ukraine in February 2022, it triggered a series of sanctions from the US, the European Union, and other Western nations aimed at crippling Russia's economy. One of the main sanctions was on Russian oil exports, which significantly impacted Russia's ability to sell oil to European markets.
As a result, Russia began offering crude oil at heavily discounted prices in an attempt to find new buyers for its oil. India, with its large energy needs and an economy sensitive to oil price fluctuations, found this offer too attractive to ignore.
The price discount on Russian oil, sometimes as much as USD 18-20 per barrel lower than the market price of other oil, allowed India to procure oil at a much cheaper rate. The discounts have, however, shrunk in recent times to less than a fifth of the peak.
In December 2022, the G7 countries imposed a price cap of USD 60 per barrel on Russian seaborne crude oil exports. This measure restricts Western companies from offering insurance and transportation services for Russian oil sold above the capped price. The objective was to curb Russia's oil revenues while maintaining a stable global oil supply. However, Russia has found ways to circumvent the cap, including acquiring a fleet of older tankers and finding alternative insurance.