Saudi Arabia has emerged as the second largest supplier of oil to India, surpassing Russia by a thin margin, according to recent industry and trade sources. India, the world’s third-biggest oil importer and consumer, shipped in 863,950 barrels per day (bpd) of crude oil from Saudi Arabia, up 4.8% from the previous month, while India’s purchases from Russia fell by 2.4%.
As a consequence of Moscow’s invasion of Ukraine in late February, and narrowed discounts granted for its oil, India had become highly dependent on Russia and became Russia’s second-largest oil importer, replacing China.
It is being discussed that being eager to secure raw materials at discounted prices, the two countries are cushioning the impact of western sanctions on Moscow, as a result of their agreement to secure raw materials at discounted prices.
However, Saudi Arabia has now replaced Russia as India’s second-largest oil exporter in August after a three-month gap while Iraq continued to hold the top spot.
In spite of Saudi Arabia’s gain, India cut African imports in order to cut its share of oil from the Organization of Petroleum Exporting Countries to 59.8%.
India’s oil imports
India’s overall crude imports in August declined to a five-month low of 4.45 million bpd, down 4.1% from July, due to maintenance at some refineries, the data showed.
Greater intake of Caspian sea oil, majorly from Kazakhstan, Russia and Azerbaijan, has reduced India’s purchases from Africa and other countries. Due to lower diesel demand during the monsoon season in India, import of west African oil has also reduced.
In August, the United Arab Emirates was the fourth largest oil supplier while Kazakhstan replaced Kuwait and became fifth-largest oil supplier to India, followed by the United States. Russian oil accounted for about 16% for India’s overall imports in April-August, the first five months of this fiscal year, at 757,000 bpd compared with 20,000 bpd in the previous year.
Oil supplies from Saudi Arabia cannot be cut because of the clauses in term contracts and Russia had to reduce its discounts as a consequence of the high demand especially in Asia. This led to Saudi Arabia overtaking Russia to become India’s second largest oil supplier.