India scales down oil exports from Russia with more appealing offers from Iraq, Saudi Arabia

Shafaq News/ India's reliance on cheap Russian crude oil is expected to decrease as traditional Middle Eastern suppliers offer more attractive conditions.

Since Russia's invasion of Ukraine last year, India's consumption of Russian crude has increased significantly, surpassing Saudi Arabia and Iraq as the top supplier. However, rising prices have reduced the discount on Russian crude, making other sources, including those with term contracts, more appealing.

"Our dependence on Russian oil is going to decrease sharply," Oil Minister Hardeep Puri said in an interview. "The cost viability from the Gulf is much more attractive now."

Prior to the Russian-Ukrainian war, India's crude oil imports from Russia were also negligible, but it soared to account for nearly half of supplies in May. However, rising prices have squeezed the discount on Russian crude. Moscow has also said this week it plans to extend export curbs.

In August, imports from Russia fell for the third consecutive month to 1.57 million barrels a day, according to data-intelligence firm Kpler, down 24% on the month and at the lowest since January — though Russia remains India's top supplier.

Refiners last month also cut shipments from Iraq, another top source of crude, by 10% to 848,000 barrels a day. Those from Saudi Arabia jumped 63% on month to 852,000 barrels a day, the data showed.

He added the government was not involved in the buying decisions of India's refiners, but instructed them to follow the Group of Seven price cap on Russian oil.

India meets over 86% of its oil demand via imports, making its economy highly vulnerable to crude prices. Every $10 increment leads to an increase of over $10 billion in current account deficit and lowers the GDP by about 0.5%, according to economist estimates.