Oil has traditionally not been a key aspect of India-Russia relationship. In fact, among all the trade deals and agreements, it has so far been at the bottom of the trade list between the two countries. However, in the wake of Russia-Ukraine war, this dynamics has changed, bringing Russian oil in the forefront of trade relations.
During his recent visit to Moscow, PM Modi acknowledged this fact and reiterated the same. He mentioned how Russia’s support has helped India meet its fuel needs, especially when the world was facing an energy crisis. Furthermore, he even added that the world should also acknowledge the fact that India Russia oil trade brought stability in the international oil market.
Recent Findings…
According to the Indian Express analysis of India’s trade data, the Indian oil refiners were able to save around $10.5 billion in foreign exchange between April 2022-May 2024. This is on account of the discounted Russian crude oil dealing between the two countries.
Following Russia-Ukraine war, the western world was imposing sanctions and reducing its oil imports from Russia. This made Russia offer its crude oil at a discounted price. Since then, Indian oil refineries have been buying crude oil at a discounted price from Russia. This development has pushed oil as one of the top commodities in the trade relations between the two countries. Moreover, Moscow has now emerged as India’s top oil supplier.
The data further highlights that if India had continued to purchase Russian crude at the same rate as from other suppliers then the bill would have rose to $145.29 billion or $5.3 billion higher. Currently, India imports approximately $139.86 billion worth of oil. In the previous financial year, Indian oil import stood at $162.21 billion. As per the report this would have been as additional $4.87 billion if the Russian oil barrels matched the price of other suppliers.
According to Reuters, the average price of Russian oil to India was $525.60 per ton between January to September 2023. While the average cost of Iraq’s oil, for the same quantity costed $564.46 per ton during the same period. India was thus able to save $2.7 billion in just first 9 months of 2023 by importing Russian oil at a discounted price. Even in this FY 2024,DGCIS data shows, that the average landed price of Russian crude, imported by Indian refiners was $76.39 per barrel. While the average landed price of oil imported from all other suppliers was $85.32. Thereby, reflecting huge savings for India.
Overall,
The discounts offered by Russia to Indian refiners, not only helped reduce our import bill but it also forced the other oil suppliers like Iraq to offer discounts. This in turn helped stabilise the international oil market. Furthermore, the saving in our oil import bill, helped India rein in the inflationary pressures and rising fuel prices. This is of key significance especially when the demand for refined products had increased by 14% in India. Lastly, Russia is now India’s largest oil supplier and both the countries have recently signed a trade target of $100 billion by 2030.