India’s oil imports from Russia drops 19% in February, Saudi Arabia 2nd largest supplier

New Delhi: Russia continued to remain the largest supplier of crude oil to India in February with $3.61 billion worth of supplies, although with a 19% drop from the previous month.

In January, India imported oil worth $4.47 billion crude oil from Russia.

The month-on-month decline in imports from Russia comes amid lower discounts offered by Russia. Russia has been the largest source of crude for India since its invasion of Ukraine in February 2022 sparked western sanctions, prompting it offer deep discounts. 

India and China have been the biggest beneficiaries of the discounts, which stood at over $30 per barrel in 2022 but have shrunk over the past year to less than $5 per barrel.

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Data from the ministry of commerce and industry showed that oil supplies from Saudi Arabia jumped 67.5% to $2.6 billion taking it to the second position in the list of oil suppliers to India, from $1.55 billion in January.

Shifting positions

For most part of the past two years, Iraq has been the second largest supplier to India. It has now slid to the third position with $2.24 billion worth of supplies in February, 11.6% down from $2.54 billion in January.

India's oil import bill in February 2024 stood at $13.25 billion, about 10% higher from $12.04 billion in January.

The sequential rise came even as consumption of petroleum products declined marginally in February. Data from the petroleum planning and analysis cell (PPAC) showed petroleum product consumption in February stood at 19.75 million tonnes, 1.3% lower from 20.01 million tonnes in January. In March, however, it increased to 21.09 million tonnes.

Also read: India's crude oil consumption up 4.6% in FY24, output rises marginally at 0.6%, imports steady: PPAC

The crude oil market has witnessed significant volatility in the past two months with escalating tensions in West Asia. A barrage of missile and drone attacks by Iran on Israel a fortnight ago raise concerns on oil supplies through the Strait of Hormuz which is a key supply route and lifted prices above $90 per barrel mark.

Simmering tensions

A report by ICRA on Thursday said that though India does not import any crude from Iran owing to sanctions, the ongoing geo-political tensions have led to an increase in Brent crude prices.

"Further, there is a threat that Iran may close the Strait of Hormuz, which is the main route of transport for crude oil from the Middle East (holding major share in oil imports) to India," it said.

Despite simmering tensions and reports of a counter-attack by Israel a week later, prices have somewhat eased and are currently below $90 per barrel. At the time of writing the story, the June contract of Brent on the Intercontinental Exchange was trading at $88.14 per barrel, higher by 0.14% from its previous close.

Also read: Oil extends losses on easing Middle East tensions, slower US biz activity; Brent steady at $88/bbl

Also, concerns of a delay in rate cuts by the US Federal Reserve and increase in oil inventory in the US have also kept prices lower.

Rate check

Rahul Kalantri, VP Commodities, Mehta Equities Ltd said: "Traders were concerned that the Federal Reserve will maintain higher interest rates for an extended period of time in the face of good inflation and employment data. However, official statistics revealed that US oil stocks declined by 6.37 million barrels last week, contrary to predictions of a 1.6 million-barrel rise."

He, said supply-side fears have eased as West Asia tensions continued to subside, with Iran and Israel indicating no additional military action against each other. "We expect crude oil prices to remain volatile in today’s session," he said.