India has purchased crude oil worth $2.9 billion from Moscow in October, ahead of the latest sanctions imposed on Russian entities, according to a European think tank.
India continues to be the second-largest buyer of Russian fossil fuels in October, after China, the report said, citing the Centre for Research on Energy and Clean Air (CREA).
US sanctions on Russian firms
India’s Russian oil purchases are in focus as the US imposed sanctions last month on Rosneft and Lukoil, two of Russia’s largest oil producers, with the aim of cutting Kremlin’s resources to fund the Ukraine war. Additionally, US President Donald Trump’s repeated claims that India has cut down its oil purchases from Russia following tariffs imposed by the US.
These sanctions have led companies such as Reliance Industries, HPCL-Mittal Energy Ltd, and Mangalore Refinery and Petrochemicals Ltd to temporarily halt imports, PTI reported.
In October, Russia exported 60 million barrels of crude oil, with Rosneft and Lukoil collectively accounting for 45 million barrels.
“India remained the second-largest buyer of Russian fossil fuels, importing a total of EUR 3.1 billion. Crude oil dominated India’s purchases at 81 per cent (EUR 2.5 billion), followed by coal at 11 per cent (EUR 351 million) and oil products at 7 per cent (EUR 222 million),” CREA noted in its monthly report for October.
India’s growing oil purchases from Russia
India, conventionally dependent on Middle Eastern oil, substantially increased its imports from Russia after the February 2022 invasion of Ukraine, PTI reported.
Russian oil was available at steep discounts due to Western sanctions and reduced demand in Europe. Therefore, India’s Russian crude imports soared from less than 1% to nearly 40% of its total crude oil imports in a short period of time.
In September, India had spent nearly $4.18 billion (3.6 billion euros), which included $2.9 billion (2.5 billion euros) on crude oil, $525 million (452 million euros) on coal, and $400 million (344 million euros) on oil products.
CREA noted that India’s Russian crude imports in October increased by 11% compared to the previous month. Although private refiners accounted for more than two-thirds of India’s total imports, state-owned refineries nearly doubled their Russian crude volumes from the previous month.
“In a keen development, the Rosneft-owned Vadinar refinery (in Gujarat) – now sanctioned by the EU and the UK – increased its production to 90% in October. After the EU sanctions in July, the refinery has been importing crude solely from Russia. In October, their imports from Russia recorded a 32 per cent month-on-month increase to their highest volumes since the full-scale invasion,” CREA said.
The refinery’s exports have decreased sharply by 47 per cent compared to the same month last year, reaching the lowest levels since May 2023, according to the report.
“While there was an 8 per cent month-on-month reduction in sanctioning countries’ imports from the six Indian and Turkish refineries using Russian crude in October, the decrease was led chiefly by the EU and UK, which recorded monthly reductions of 9 per cent and 73 per cent,” CREA said.
After Russia invaded Ukraine in February 2022, a series of sanctions was imposed by the United States, the European Union, and other Western nations with the aim to hamper the Russian economy. One of the primary sanctions targeted Russian oil exports, which greatly affected Russia’s capacity to sell oil to European markets.
Consequently, Russia started selling crude oil at heavily discounted rates to attract new buyers. India, with its significant energy demands and an economy sensitive to fluctuations in oil prices, ramped up its purchases.
The discount on Russian oil, which has sometimes been as high as $18-20 per barrel below the market price of other oils, enabled India to buy oil at a cheaper price.