India's Russian Oil Imports Surge Despite Sanctions: A Strategic Move Amidst Geopolitical Pressures

Despite facing sanctions, India has seen a notable surge in its imports of Russian oil. In April, Indian refiners brought in a total of 1.96 million barrels per day (bpd) of Russian crude, marking the highest volume since July of the previous year. This increase, nearly 19 percent higher than March's imports, comes amidst disruptions to Russian refining capacity due to Ukrainian drone attacks. Consequently, Moscow has directed more discounted barrels for export, as indicated by vessel tracking data and industry observations.

India’s Russian oil imports jumped to a nine-month high in April

This uptick in Russian crude imports by India occurred despite recent sanctions by the United States targeting Russia's oil shipping sector. There were speculations that Indian refiners might exercise caution in their purchases. However, trade sources suggest that the impact of these sanctions on Russian oil flows to India was marginal and short-lived.

In April, Russia accounted for 40.3 percent of India's total crude oil imports, the highest share in seven months. This resurgence follows a decline from a peak of nearly 46 percent in May 2023 to around 33 percent in recent months.

Viktor Katona, head of crude analysis at Kpler, explained that the first wave of Ukrainian drone strikes on Russian refining infrastructure pushed seaborne oil exports to 3.8 million bpd. With limited domestic refining capacity, Russia's surplus oil was exported, providing Indian buyers with more purchasing opportunities.

Despite US sanctions targeting Russian shipping entities, Indian refiners have continued to accept deliveries on tankers associated with Sovcomflot, a major Russian shipping company. Indian regulators have provided clarity on the scope of these sanctions, alleviating concerns.

Furthermore, India's shipping regulator has approved Russian insurance firms to provide marine insurance cover to tankers, ensuring that cargoes are not subject to price caps imposed by the G7. This move aligns with Russia's strategy to offer discounts on its crude, attracting Indian refiners who seek cost-effective options.

In April, Indian refiners favored medium-sour Urals crude, Russia's flagship grade, with imports reaching a record high of 1.54 million bpd, comprising nearly 79 percent of India's Russian oil imports. This preference is attributed to the significant price differentials compared to crude grades from traditional West Asian suppliers.

As a result, oil imports from Saudi Arabia fell to a seven-month low, while imports from Iraq also decreased. This shift underscores India's sensitivity to oil prices and its willingness to capitalize on discounts offered by Russia, despite shrinking discount levels.

India's sustained interest in Russian oil, despite geopolitical tensions and sanctions, reflects its strategic approach to securing cost-effective energy sources as the world's third-largest consumer of crude oil.