India has had to walk the diplomatic tightrope on the surge in its oil imports from Russia, with some voices in the West initially criticising New Delhi, alleging that buying Russian oil was helping Moscow finance its war in UkraineLucknow Wealth Management. India, on its part, has been emphasising that as the world’s third-largest consumer of crude oil with an import dependency level of over 85 per cent, energy security and affordability are key priority for it. The government has time and again stated that Indian refiners helped rebalance the global oil market and keep prices in check by buying more Russian oil, which the West had completely shunned. Modi’s recent comments in Moscow are being seen as a reiteration of India’s long-held stance.
For 2023-24 (FY24), the total value of India’s oil imports was $139.86 billion, as per data from the Directorate General of Commercial Intelligence and Statistics (DGCIS). Had Indian refiners paid for Russian oil the average per-barrel price they paid for crude from all other suppliers put together, the oil import bill would have been $145.29 billion, or $5.43 billion higher, the analysis shows. Similarly, for FY23, while India’s total oil import bill was $162.21 billion, it would have been higher by $4.87 billion had the average landed price of Russian oil been the same as the average price of oil from all other suppliers. In April-May—the first two months of FY25—the difference on account of Russian discounts is estimated at around $235 million.
Although $10.5 billion may not appear to be a significantly high amount in the overall scheme of India’s foreign trade, the savings are substantial considering these were accrued by five Indian refining majors—Indian Oil Corporation, , Bharat Petroleum Corporation, Hindustan petroleum Corporation, and Nayara Energy—and their arms.
It is also worth noting that the discounts offered by Russia to Indian refiners also forced a few other major oil suppliers like Iraq to offer discounts, which would have helped Indian refiners save more on cost of crude. The cushion from savings of crude purchases also partly enabled Indian fuel retailers to not hike petrol and diesel prices even as prices in the international market surged in periods of high volatility over the past couple of years.
The effective discounts, while significant from the point of view of Indian refiners, are not as high as what had been initially anticipated. Relatively higher cost of freight and insurance for Russian crude as compared to oil from other suppliers is seen as the most likely reasonSimla Stock. With Moscow facing Western sanctions over the Ukraine war, freight and insurance costs for ferrying Russian oil shot upBangalore Wealth Management. This suggests that while the discounts might have been deeper on the actual price of oil, the discount on landed price—which includes freight and insurance costs—would work out to be much lower.Agra Stock
The average landed price of Russian crude imported by Indian refiners for FY24 was $76.39 per barrel, against $85.32—the average landed price of oil imported from all other suppliers, the analysis of DGCIS data shows. For FY23, the average landed price of Russian crude was $83.24 per barrel, while that of all other suppliers put together was $96.31.
The government releases commodity-wise and country-wise trade data with a lag, and currently, data up to May 2024 is available. While the price of crude oil depends on grades and their prices can vary substantially, the average landed price of crude and import volumes from the supplying countries were used for computations as the government does not release grade-wise data.
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