Russia is looking for new markets for its oil exports as Western nations impose tougher sanctions on Russia over its invasion of Ukraine. In such a scenario, India is taking advantage of discounted prices to increase its oil imports.
The United States has said that while these oil imports do not violate sanctions on Russia, "Russia's support ... is support for an attack that is clearly having devastating effects."
Where does India buy oil?
India is the world's third largest oil consumer after the United States and China and imports more than 80% of its consumption.
In 2021, India bought about 12 million barrels of oil from Russia, which was only 2% of its total imports.
Last year, most of the oil was supplied from the Middle East, followed by significant imports from the United States and Nigeria.
In January and February this year, India did not import any oil from Russia.
By contrast, the March and April contracts have already reached 6 million barrels, according to data compiled by research group Kepler.
The Indian government says that even if it buys more oil from Russia, it will be "the equivalent of a drop in a bucket full of real oil" in its global oil imports.
What price is India paying?
Following Russia's invasion of Ukraine, buyers of its crude oil, the Urals, have dwindled and prices have plummeted.
Matt Smith, a Kepler analyst, says: "Although we do not know the exact price India is paying, the rebate in the Urals has risen to almost ڈالر 30 a barrel compared to Brent crude [the global benchmark] last week. Was
These two types of crude oil are usually sold at the same price.
He added that at one point in March, the price difference reached record levels as the price of the Urals continued to fall.
Therefore, he says, "India and China could possibly buy some of this [Russian] crude oil at a significant discount."
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| India imports 80% of its oil |
What are the implications of financial sanctions?
It is also a big challenge for India's major refining companies to buy oil at this discounted price due to restrictions on Russian banks.
This is a big bilateral issue for trade.
Bloomberg financial analysts estimate that Indian exporters are currently awaiting payment of about ً 500 million from Russia.
One of the options India is considering is a system of transactions based on local currencies, where Indian exporters can be paid in rubles instead of dollars or euros by Russia.
Where else to look for Indian oil?
According to refinance analysts, India's oil imports from the US have increased significantly since February.
However, oil market analysts say that this could not be sustainable in the future as the United States seeks to use its domestic oil production instead of supplies from Russia after the invasion of Ukraine.
There are also indications that India should develop a barter system for trade with Iran, under which Indian refineries can buy oil from Iran.
It should be noted that this arrangement was stopped three years ago when the United States re-imposed sanctions on Iran.
But without a broader agreement reached in international negotiations on its nuclear program with Iran, it is unlikely to resume.
Also read : Will Russia's next target be the city of Odessa, known as the "Black Sea Diamond"?
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