Russian barrels were cheaper than Saudi crude oil from April to June, with the discount rising to nearly $19 a barrel in May, according to Bloomberg’s calculations based on Indian government data. Russia surpassed the kingdom in June as India’s second-largest supplier, just behind Iraq.
India and China have become willing consumers of Russian crude as most other buyers shun its barrels after the invasion of Ukraine. The South Asian nation imports 85% of its oil needs, and cheap supplies offer some economic relief as the country faces increased inflation and a record trade deficit.
According to government data, the country’s crude import bill rose to $47.5 billion in the second quarter, after a rise in world prices coincided with a pick-up in fuel demand. That’s $25.1 billion in the same period last year, when prices and volumes were lower. Oil has recently collapsed amid concerns about an economic slowdown, giving consumers some respite.
“Indian refiners will try to get the cheapest crude that will work with their refinery and product configurations,” said Vandana Hari, founder of Vanda Insights in Singapore. “Russian crude oil fits that bill for now. The Saudis and Iraqis are not completely missing the point because they are sending more supplies to Europe.”
While Russian oil’s discount to Saudi crude narrowed in June, barrels were still about $13 cheaper, averaging about $102. That compares to a premium of just over $13 in March, although most of India’s pre-invasion monthly supply would have been dissolved by the end of February. The kingdom was India’s second largest supplier in 2021, while Russia was the ninth.
Iraq was the largest supplier of crude oil to India and has held that spot through June this year. OPEC producer oil was about $9 a barrel higher than Russian barrels in May, but was discounted in all other months. India’s imports from Russia have increased tenfold since March.