India Saves $2.7 Bn By Importing Discounted Russian Oil, Eases Trade Deficit

India has reaped substantial financial benefits by importing discounted Russian oil in the first nine months of this year, leading to cost savings of approximately USD 2.7 billion, according to calculations based on government data. 

Crude oil accounts for a significant portion of India's imports by value, making this cost-saving measure even more significant. The nation, as the world's third-largest oil importer and consumer, has emerged as the largest buyer of seaborne Russian crude oil this year. This shift occurred after Western sanctions were imposed on Moscow in response to its invasion of Ukraine last year.

India's access to cost-effective Russian oil enabled it to reduce its imports from the Middle East, where oil prices had strengthened due to voluntary supply cuts by Saudi Arabia since July. In the first nine months of the year, India imported a substantial 69.06 million metric tons of Russian oil, equivalent to approximately 1.85 million barrels per day, as per commerce ministry data. 

The average price for Russian oil delivered to Indian refiners during this period, which encompasses shipping and insurance costs, stood at USD 525.60 per ton. In comparison, the average landed cost of Iraqi oil, similar in quality to the medium-sour Russian Urals crude that constitutes the majority of India's Russian oil purchases, was USD 564.46 per ton during the same period. These calculations reveal that India saved a substantial USD 2.7 billion by opting for Russian oil over Iraqi oil.

Russia has now become the top oil supplier to India, surpassing Iraq, with Saudi Arabia relegated to the third position. In addition to the bulk of Russia's Urals crude, India also imports other Russian grades, including light sweet ESPO and Sokol.

China, the world's largest oil importer, has also achieved substantial savings this year, amounting to nearly USD 10 billion. This was made possible through its record purchases of oil from countries under Western sanctions, including Russia.