Notwithstanding the teething problems in the rupee-ruble payments mechanism, India’s oil imports from Russia further increased in June with a record high of 2.2. million barrels per day (bpd) being shipped into New Delhi compared to 1.96 million bpd in May.
“Rupee-ruble payment mechanism needs to be worked out and authorities are working towards a long term solution but what needs to be highlighted is the fact that the existing problems have not impacted trade. Going forward, issues related to payment mechanism will not hinder economic activities between India and Russia,” a senior government official told India Narrative.
India’s crude imports from Russia at present are higher than the combined shipment from Saudi Arabia and Iraq.
India imported Russian crude at around $68.21 a barrel, while Saudi oil was priced at $86.96.
However, data analytics platform Kpler said that India may have to limit its imports from Russia going forward as it would have to balance ties with other oil exporting nations. For one, Iran, which is also under US sanctions, is keen that India resumes oil imports from Tehran.
Despite US sanctions on Russia, India has continued to import crude oil from Moscow. India has maintained that strategic interest will be the guiding force for carving out New Delhi’s foreign policies. Until 2018 – when the US sanctions kicked in, Iran was one of the primary oil suppliers for India.
Meanwhile, amid increasing crude trade between India and Russia, the two countries have now decided to switch to the Dubai oil price benchmark for their oil deals instead of the Europe-focused Brent benchmark. Moscow has already made it clear that its focus would be on Asia. More than 90 per cent of Russian oil is flowing into Asia since the beginning of the Ukraine war last year.
In 2021, Russian oil comprised just 2 per cent of India’s total crude imports. But now it accounts for about 42 per cent of Indian crude imports, which is close to the estimated maximum of 40-45 per cent that refiners could technically process given the quality of the crude, S&P Global said.
Currently, India along with China comprise the major oil export markets for Russia.
“Granted, China too has taken far more Russian crude over the past year, with imports hitting records, but it is India, a strategic US partner, that has stepped in from the wings to prop up the Russian economy,” Bloomberg noted.
Meanwhile, earlier this year Russian largest oil major Rosneft an agreement with the state-owned refiner Indian Oil Corp to “substantially increase oil supplies as well as diversify the grades to India.”