India’s Russian oil imports robust in Sept so far, crude loadings from ports stable

India’s Russian oil imports in the first 16 days of September were at 1.73 million barrels per day (bpd), per provisional vessel tracking data from global real-time data and analytics provider Kpler. The import volumes for full July and August stood at 1.59 million bpd and 1.66 million bpd, respectively.

As for oil loadings at Russian ports, September 1-16 volumes loaded for India were at 1.22 million bpd, but the actual figure could be close to 1.6 million bpd as a number of tankers laden with Russian crude are headed towards Egypt’s Port Said and are not reflecting their final destination. Industry watchers expect a large share of this oil to also come to India, given many of these tankers have regularly discharged crude at Indian ports over the past few months. A similar trend was also observed in August loadings for India, which are also estimated at around 1.6 million bpd, including some cargoes that are expected to reflect their final destination only once they transit the Suez Canal. The journey time for tankers transporting Russian crude to Indian ports through the Suez Canal—the main supply route—typically ranges between three and four weeks.

Indian refiners’ heavy imports of Russian crude are seen as a lever that the Trump administration believes it can use to force the Kremlin’s hand into ending the Ukraine war. Oil exports are the biggest source of revenue for Moscow, and New Delhi is the second-largest buyer of its oil after Beijing. But despite US rhetoric and imposition of 25 per cent secondary tariff over the 25 per cent tariff imposed earlier on most Indian goods, India has shown no signs of backing down on Russian oil imports.

New Delhi has termed the Trump administration’s action “unjustified and unreasonable” and said these imports began as its traditional supplies were diverted to Europe, with the US having “actively encouraged such imports by India for strengthening global energy markets stability”. The Joe Biden administration had encouraged India to increase Russian oil imports following Russia’s February 2022 invasion of Ukraine as the West began shunning Moscow’s oil. The reason was simple: Russia is a major oil exporter and if a bulk of its oil goes off the market for dearth of buyers, international oil prices could shoot up, something that the US itself did not desire.

The key question has been whether Indian refiners will meaningfully cut their appetite for Russian crude. While July and August saw a decline in deliveries of Russian crude at Indian ports as compared to earlier months, industry insiders attributed that largely to shrinking discounts on Moscow’s oil, and not American pressure, as those cargoes would have been booked weeks before Donald Trump upped the ante against India in July and announced additional tariffs on Indian goods early August. The discounts

The Indian government has consistently maintained that the country will buy oil from wherever it gets the best deal, as long as the oil is not under sanctions. There are no sanctions on Russian oil; it is only subject to a price cap imposed by the US and its allies that applies if Western shipping and insurance services are used for transporting the oil. India’s public sector refiners have stated that they have not received any signal or directive from the government on the issue, and they will continue to buy Russian oil as long as it remains economically and commercially viable.

India is the world’s third-largest consumer of crude and depends on imports to meet around 88 per cent of its requirement. Russian crude, which usually comes at a discount, has helped India save billions of dollars’ worth of foreign exchange over the past three years.

While there is a domestic trade-off at play—the prohibitive cost of sky-high US tariffs on India’s small and medium exporters versus the relatively lower savings accrued by large refiners by buying discounted Russian crude—Trump’s public posturing has made it difficult for India to cut back on Russian oil immediately even if it wanted to. It is clear that New Delhi does not want to compromise on its strategic autonomy and is unwilling to be dictated to by Washington on whom it should be doing business with, particularly when it comes to Russia—an old and key strategic partner.

When Russia invaded Ukraine in February 2022, Moscow’s share in New Delhi’s oil imports was less than 2 per cent. With much of the West snubbing Russian crude following the invasion, Russia began offering discounts on its oil to willing buyers. Indian refiners were quick to avail the opportunity, leading to Russia—earlier a peripheral supplier of oil to India—emerging as India’s biggest source of crude within a matter of months, displacing the traditional West Asian suppliers. Currently, Russia accounts for more than a third of India’s oil imports by volume.