India’s Oil Imports from Saudi Arabia and Russia

  • 03 Oct 2024

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Context

  • India’s crude oil imports are influenced by refinery maintenance cycles, which affect demand.
  • August saw a dip in oil demand due to pre-maintenance preparations, but September recorded a recovery.

September Oil Import Trends

  • Saudi Arabia:
    • Imports rose 39.8% month-on-month to 0.73 million barrels per day (bpd), the highest since March.
    • Saudi market share increased to 15.5% in September from 11.7% in August.
    • Riyadh is reducing prices to regain lost market share, as earlier imports had plummeted to a multi-year low (0.42 million bpd in June).
  • Russia:
    • Remains India’s largest oil supplier with imports increasing by 6.4% from August to 1.88 million bpd.
    • Russian crude constituted 40.2% of India’s total crude imports of 4.68 million bpd in September.
  • Iraq:
    • Supplied 0.87 million bpd, accounting for 18.7% of total imports.
  • UAE:
    • Oil imports increased by 18.6% month-on-month to 0.49 million bpd, the highest since June 2022.

Market Dynamics

  • Price Sensitivity: Indian refiners are highly price-sensitive, which could lead to increased competition among suppliers.
  • Potential for Increased Russian Imports: With Indian refiners expected to secure larger long-term contracts for Russian oil, further increases in imports from Russia are anticipated.

Strategic Implications

  • Saudi Arabia is concerned about losing market share to Russia, especially as India’s refiners are currently favoring discounted Russian crude.
  • Increased competition may benefit Indian refiners through better pricing from various suppliers.

Economic Context

  • India, as the world's third-largest oil consumer with over 85% import dependency, is significantly affected by global oil price fluctuations.
  • Although discounts on Russian crude have decreased, the overall savings from purchasing large volumes remain significant for Indian refiners.

The evolving landscape of India’s oil imports highlights the competitive dynamics among major suppliers, particularly Saudi Arabia and Russia, and underscores India’s strategic importance as a key market in the global oil sector.