India’s Substantial Investment in Russian Oil Amid Ukraine Conflict
Since the onset of the Ukraine war, India has spent approximately 102.5 billion euros on Russian crude oil, making it a significant player in Russia’s fossil fuel market. The country has shifted its oil sourcing towards Russia due to substantial price discounts amid Western sanctions, although recent sanctions have complicated import dynamics. Despite these challenges, Russia remains India’s leading oil supplier.
India, the third largest global consumer and importer of oil, has expended approximately 102.5 billion euros (around Rs 1.5 lakh crore) on Russian crude oil since the start of the Ukraine conflict, according to a recent report from the Centre for Research on Energy and Clean Air (CREA). Reportedly, Russia has generated EUR 835 billion in revenue from fossil fuel exports since February 24, 2022.
China remains the largest importer of Russian fossil fuels, totaling EUR 235 billion, with specific breakdowns indicating EUR 170 billion for oil, EUR 34.3 billion for coal, and EUR 30.5 billion for gas. From the onset of the war until March 2, 2025, India is projected to have procured EUR 205.84 billion worth of fossil fuels from Russia, including EUR 112.5 billion for crude oil and EUR 13.25 billion for coal.
India’s heavy reliance on crude oil imports—over 85 percent of its needs—saw expenditures of USD 232.7 billion in 2022-23 and USD 234.3 billion in 2023-24, with USD 195.2 billion spent in the first ten months of the current fiscal year. Following the invasion, India began importing significant amounts of oil from Russia primarily due to heavily discounted prices resulting from Western sanctions against Russia.
Before the Ukraine conflict, Russian oil constituted less than 1 percent of India’s total imports; however, it surged to around 40 percent shortly thereafter. Moreover, Indian refineries transformed this Russian crude oil into fuels like petrol and diesel which were then exported to Europe and various G7 nations, as highlighted by CREA.
Recent sanctions imposed by the United States have, however, led to a decline in Russian oil imports, particularly with India avoiding cargoes associated with sanctioned vessels or insurance entities. Nevertheless, Russia remains India’s leading oil supplier, with imports averaging 1.48 million barrels per day in February, slightly down from 1.67 million bpd a month earlier.
The invasion triggered a wave of sanctions from the United States and the European Union, aimed at undermining the Russian economy, particularly through the oil export sector. In response, Russia began offering significant discounts on its crude oil to attract new buyers, which caught India’s attention, given its pronounced energy demands. The discounts, initially between USD 18-20 per barrel below other market rates, have recently moderated to less than USD 3 per barrel.
In conclusion, India’s substantial investment in Russian oil since the onset of the Ukraine war underscores its dependency on energy imports and the impact of geopolitical events on global oil markets. While the initial allure of discounted Russian crude resulted in significant import increases, recent sanctions have forced a reevaluation of such transactions. Despite the challenges imposed by changing sanctions, Russia continues to be a key supplier for India amidst its growing oil needs.
Original Source: www.ndtv.com
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