In a surprising move, India has reduced by 50 percent its imports of the crude oil from the United States and doubles import of cheap Russian oil in first half of calendar year 2022.
In 2021, Russian oil in India’s crude basket was just 2.2%, while the U.S. was 9.2%. However, in first half of 2022, Russia accounts for 13% of India’s crude imports, while the U.S. share dropped to 5.4% _ 50 percent less than last year.
India has never been a big buyer of Russian crude oil and in a typical year, India imports just 2-5% of its crude from Russia, roughly the same proportion as the United States did before it announced a 100% ban on Russian energy commodities. Indeed, India imported only 12 million barrels of Russian crude in 2021, with the majority of its oil sourced from Iraq, Saudi Arabia, the United Arab Emirates and Nigeria.
But back in May, reports emerged of a “significant uptick” in Russian oil deliveries bound for India.
India has spent $5.1 billion on the imports of Russian oil, gas and coal in the first three months after the Ukraine invasion, five times more than a year ago.
Overall, China is the largest buyer of Russian energy commodities spending $19 billion in the three months to the end of May, double than a year ago.
The International Energy Agency (IEA) said that the Urals crude from Russia have been offered at record discounts. Ellen Wald, president of Transversal Consulting, said that a couple of commodity trading firms–such as Glencore and Vitol–were offering discounts of $30 and $25 per barrel, respectively, for the Urals _ the main blend exported by Russia.
Experts say simple economics are the biggest reason why White House pressure to curb purchases of crude oil from Russia have fallen on deaf ears in Delhi.
Responding to a question on India-Russia ties, U.S. state department spokesperson Ned Price has acknowledged that India shares a historical relationship with Russia, and it would be a Herculean task to change that.
