India's OPEC Oil Imports Hit Record Low As Russian Barrels Surge In 2023

In a significant shift in India's crude oil import dynamics, data obtained from trade and industry sources reveal that the annual share of OPEC's oil in India reached its lowest level ever in 2023, while imports of discounted Russian barrels soared to an all-time high.

India, the world's third-largest oil importer and consumer, traditionally relied on nearby Middle Eastern nations to meet the majority of its oil needs, aiming to reduce freight costs.

For the first time last year, India imported nearly equal quantities of oil from the Organisation of the Petroleum Exporting Countries (OPEC) members as it did from non-members, with the data indicating an average import of 4.65 million barrels per day (bpd) in 2023, a 2 per cent increase from the previous year.

OPEC's share in India's crude oil imports witnessed a significant decline to approximately 49.6 per cent in the first nine months of the fiscal year from April, compared to 64.5 per cent a year earlier, according to the data. 

This shift is attributed to altered trade flows due to geopolitical tensions and higher shipping costs from some traditional suppliers.

India has accelerated efforts to diversify its import sources and tap into cheaper supplies from more distant regions, including Russia. In 2023, Russian oil imports accounted for about 36 per cent of India's total crude purchases, reaching 1.66 million bpd, a notable increase from the average of 651,800 bpd in 2022.

Discounted Russian oil played a key role in reducing India's reliance on Middle Eastern oil to the lowest level ever, driven by geopolitical dynamics and retaliatory measures against Russia's invasion of Ukraine.

However, in December, India's imports of Russian oil experienced a decline to the lowest in a year, with shipments dropping by approximately 16.3 per cent from November. This was attributed to some cargoes being diverted as a response to tightened rules by Washington, including enhanced scrutiny by banks and service providers to ensure compliance with the $60 per barrel price cap.

Oil minister Hardeep Singh Puri explained that the diversion of cargoes was due to pricing considerations. In 2023, Russia emerged as the top oil supplier to India, displacing Iraq from the leading position, while Saudi Arabia fell to the third position. The shifting dynamics underscore India's efforts to adapt to evolving global circumstances and diversify its energy sources.