India\u2019s close ties with Russia have seen it ramp up purchases of bargain commodities in the two and a half months since the invasion of Ukraine began.<\/p>\n
Data from S&P Global Market Intelligence shows India\u2019s seaborne crude oil imports surpassed 4.8m barrels per day in April, the highest on record, with higher Middle East and Russian volumes displacing cargoes from further afield, such as the US, Canada and West Africa.<\/p>\n
Russian-origin crudes hit 5% of India\u2019s total seaborne imports in April for the first time, rising from under 1% throughout 2021 and Q1 2022.<\/p>\n
As of May 9, almost 10m barrels of crude loading from Russia\u2014including 970,000 barrels of Kazakhstan\u2019s CPC Blend\u2014have discharged in India this month. Another 16 vessels with 13m barrels are currently indicating India as their destination and are expected to arrive within the next four weeks. This includes one cargo each of CPC Blend and Siberian Light and the rest comprising Urals.<\/p>\n<\/div>\n
\nRussian oil exports are back to pre-war levels thanks to Indian custom<\/p>\n<\/blockquote>\n<\/div>\n<\/div>\n
\u201cA rebound in domestic demand as well as stronger oil product exports likely spurred India\u2019s crude import volumes. Refiners have been highly attracted to discounts for Russian-origin cargoes and India has been a major alternative destination for Urals crude that would typically have been sold to refiners in Europe. Conversely, stronger demand from European end-users for other Atlantic Basin crudes\u2014to replace Russian cargoes\u2014pushed up these procurement costs, and India has instead turned more to the Middle East in the last month,\u201d commented Yen Ling Song, associate director at S&P Global Market Intelligence.<\/p>\n
Russian exports rebounded in April by 620,000 barrels per day from the month before to 8.1m barrels per day, the International Energy Agency said in a global markets update yesterday, back to their January-February average as supply was rerouted away from the US and Europe, primarily to India.<\/p>\n
Indian politicians have been defending their decision to buy so much Russian crude while other nations look to wean themselves off Russian energy reliance in the wake of the invasion of Ukraine.<\/p>\n
Finance minister Nirmala Sitharaman recently commented: \u201cI will put my country\u2019s interest first and energy security first. If oil is available and at a discount, why shouldn\u2019t I buy it?\u201d<\/p>\n
External affairs minister S Jaishankar, too, has weighed in on the matter. India\u2019s total oil purchases from Russia in a month would probably be less than what Europe does in an afternoon, he said recently.<\/p>\n
<\/div>\nRussia has been reportedly offering discounts of as much as $30-35 per barrel on its flagship Urals grade to woo India.<\/p>\n
It\u2019s not just oil that the Narendra Modi-led country is keen to buy from its old friend, Russia.<\/p>\n
In a notice released on May 5, India\u2019s Ministry of Power instructed all power plants to increase their imports of coal. Specifically, the ministry demands that power plants designed to run on domestic coal start importing at least 10% of their requirements.<\/p>\n
The government\u2019s intervention comes as many states have suffered prolonged power outages since April and the country is two months into an unprecedented heatwave with reports this week of dehydrated birds falling from the skies amid the protracted 40+ degree environment. The upcoming monsoon is likely to cause additional problems and lead to lower domestic coal production, thereby adding to import requirements.<\/p>\n
\u201cIndia will attempt to increase shipments from Australia and Indonesia, their main trade partners, but supply side difficulties could emerge. In Australia, recent heavy rainfall on the east coast is challenging coal logistics, and a requirement to sell 25% domestically limits Indonesian coal miners\u2019 export potential,\u201d commented Niels Rasmussen, chief shipping analyst at BIMCO, adding: \u201cIndia may instead look towards Russia, especially from mid-August when the EU\u2019s ban of Russian coal is fully implemented.\u201d<\/p>\n
Preliminary government statistics show that India\u2019s overall imports from Russia witnessed a more than three-fold jump to $4.67bn from a year before since the Ukraine conflict began on February 24.<\/p>\n
Between February 24 and May 8, India\u2019s purchases of crude oil from Russia jumped 393% to $1.86bn, while those of petroleum products surged 175% to $560m, government data shows. Similarly, imports of coal climbed 277% to $630m, and fertiliser purchases saw a multi-fold jump to $376m from $43m.<\/p>\n
The growth in import value is aided by a rise in global commodity prices in recent months and a relatively low base but is nevertheless remarkable and shows the firm friendship between New Delhi and Moscow.<\/p>\n
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