India’s imports of Russian crude skyrocketed by more than 700% last year at the expense of the country’s traditional suppliers, new data shows.
Russia is now the third-largest supplier of crude to India after Iraq and Saudi Arabia, according to Italian shipbroker Banchero Costa.
In 2022, India imported 33.4m tonnes of crude oil from Russia, up from just 4.1m tonnes in the previous year. Russia now accounts for 15% of India’s crude oil imports.
But increasing demands to prove the crude is compliant with Western sanctions could slow down the pace of approvals and potentially weigh on India’s Russian purchases.
Refinery and banking executives report that the need to prove Russian imports comply with a $60-per-barrel cap imposed by G7 nations now requires additional steps and verification of official invoices, contract documents, plus shipping and insurance information — details not previously demanded, reported Bloomberg.
Refinery executives told Bloomberg that most of their Russian crude is purchased on a delivered-at-port basis, which takes into account the cargo’s overall price inclusive of shipping and insurance costs.
They added that this makes it tough to provide evidence of the standalone cost of the cargo on a so-called free-on-board basis, which banks are demanding.
The European Union has sought to halt Russian oil flows into the region and to curb the ability of its banks, insurers and shippers from handling Russian trade.
Meanwhile, the G7 oil-price cap is intended to keep crude in the market while crimping revenue that flows to Russia and funds its war on Ukraine.
Banchero Costa said India was the third-largest seaborne importer of crude oil in the world in 2022, after the EU and China.
Last year, India accounted for 11% of global crude oil imports, in what remains a very fragmented market, the Italian broker said.
“Imports into India have grown rapidly over the years, driven both by domestic demand but also due to the establishment of a large export-oriented refining industry,” Banchero Costa said.
“India’s seaborne crude oil imports in 2022 increased by 11.5% year on year to 223.8m tonnes, from 200.7m tonnes in 2021.
“Volumes were particularly high in the second quarter of 2022 with 59.5m tonnes, up 18.1% year on year and the strongest quarter on record.”
While Russia has increased crude flows to India, Banchero Costa said other producing nations have missed out.
Volumes from West Africa to India declined by 23.4% year on year in 2022 to 18.2m tonnes, while those from South America fell almost 30% to 6.3m tonnes.
Shipments from the US to India also declined by 16.1% to 15.7m tonnes, while volumes from Mexico were down 31.9% year on year to 4.7m tonnes in 2022.
