Before the Russia-Ukraine conflict, Saudi Arabia was India’s second-largest crude oil supplier, while Russia was only the ninth supplier. However, since the outbreak of the Russia-Ukraine conflict, India’s crude oil imports from Russia have surged tenfold , and Russia has replaced Saudi Arabia as India’s second-largest supplier of crude oil, after Iraq.
A fierce “crude oil price war” is brewing in India, and Russia has expanded its market share in India with lower prices than Saudi Arabia.
According to foreign media calculations based on Indian government data, between April and June 2022, the price of Russian crude oil was lower than that of Saudi crude oil, and the difference widened to nearly $19 a barrel in May. In June, Russia overtook Saudi Arabia to become India’s second-largest crude oil supplier.
The target markets for Russian crude exports are India and China, as most other buyers shunned Russian crude in the wake of the Russian-Ukrainian conflict. India relies on imports for 85% of its crude oil needs, and cheap supplies from Russia have provided some relief to the economy at a time when the country faces rising inflation and a record trade deficit.
India’s crude oil imports rose to $47.5 billion in the second quarter from $25.1 billion a year earlier, when prices and volumes were lower, government data showed. Oil prices have fallen sharply recently on fears of an economic slowdown, giving consumers some respite.
Vandana Hari, founder of Vanda Insights in Singapore, said in an interview with the media:
Although Russian crude’s discount to Saudi crude narrowed in June, it was still about $13 a barrel cheaper than Saudi crude, which averaged about $102 a barrel in Russia. In comparison, the discount for Russian crude in March was just over $13. However, prices for most of India’s monthly supplies were fixed before the Russian- Ukrainian .
Iraq is India’s largest crude oil supplier, and as of June this year, remains firmly in first place. Iraqi crude was about $9 a barrel above Russia’s in May, but was below Russia’s in all other months.