New Delhi (Reuters) – Recent data obtained from trade and industry sources reveals a significant transformation in India’s crude oil import landscape, with the annual share of OPEC‘s oil dropping to its lowest level in 2023, while the influx of discounted Russian barrels reached an all-time high.
As the world’s third-largest oil importer and consumer, India historically relied heavily on Middle Eastern nations to fulfill the majority of its oil needs, a strategy aimed at minimizing freight costs.
However, 2023 marked a noteworthy shift, as India imported nearly equal quantities of oil from the Organisation of Petroleum Exporting Countries (OPEC) members and non-members for the first time, according to the data.
In 2023, India imported an average of 4.65 million barrels per day (bpd) of oil, a 2% increase from the previous year. Meanwhile, OPEC’s share in India’s crude oil imports plummeted to approximately 49.6% in the first nine months of the fiscal year, down from 64.5% the previous year.
Geopolitical tensions and more expensive shipments from traditional suppliers prompted India to expedite efforts to diversify its import sources, tapping into more cost-effective supplies from distant regions such as Russia.
Russian oil accounted for about 36% of India’s total crude purchases in 2023, totaling 1.66 million bpd, a stark increase from the average of 651,800 bpd in 2022. The availability of discounted Russian oil also contributed to a historic low in India’s intake of Middle Eastern oil.
The cost advantage of Russian oil became apparent as Western nations refrained from purchases from Moscow in response to its invasion of Ukraine. However, in December, India’s imports of Russian oil experienced a decline, reaching the lowest levels in a year. Some shipments were diverted following tightened rules by Washington, including enhanced scrutiny by banks and service providers to ensure cargoes did not breach the $60 per barrel price cap.
Last month, India imported 1.34 million bpd of Russian oil, a 16.3% decrease from November. Oil Minister Hardeep Singh Puri attributed the decline to pricing issues.
Russia emerged as India’s top oil supplier in 2023, surpassing Iraq, which now holds the second position, with Saudi Arabia dropping to third place. The shifting dynamics reflect India’s strategic efforts to diversify its crude oil sources amid evolving global geopolitical and economic conditions.