Russia remains India’s largest crude supplier in August: Kpler data

India imported approximately 2.1 million barrels of crude oil from Russia in August, according to data from Kpler, a maritime intelligence and research firm. This figure represents a significant decrease from the record highs of around 2.6 million barrels per day in July and June this year. Despite the decline, Russia remains India’s largest crude supplier, contributing over 40% of the country's imports. The other major suppliers include the United Arab Emirates (UAE), Saudi Arabia, Venezuela, Nigeria, and Brazil.

According to Sumit Ritolia, a senior manager at Kpler, the decline in Russian oil imports does not indicate a weakening demand for Russian oil in India. Instead, it is attributed to factors such as refinery maintenance, normalisation after a period of strong buying, lower Russian export availability, and increased competition from China. In July, Russia was followed by the UAE, Saudi Arabia, Venezuela, and Oman in terms of crude oil imports.

The shift in India's energy imports towards the United States has continued in August, particularly for liquefied petroleum gas (LPG). This change is mainly due to the reduced availability from West Asia and the need for Indian buyers to diversify their sources to secure replacement cargo. However, experts note that there are additional costs associated with replacing nearby West Asian supplies with cargo from the United States and other distant origins, including higher freight costs due to longer voyages and tighter global availability.

The recent heavy sanctions imposed by the United States on Iran are unlikely to have a significant impact on India's crude oil imports, as India's direct exposure to Iranian oil has been minimal in recent years. India's biggest concern regarding Iranian supplies lies in the second-order effects, particularly through China. If China, which imports over 50% of Iran's crude oil, needs to source oil from elsewhere, it could lead to increased competition for the barrels that India relies on, potentially driving up benchmark prices and increasing India's import bill.

India's vulnerability to Iranian supplies primarily concerns LPG supply balances and freight and insurance issues in the region rather than oil volumes. The renewed escalation in the Iran conflict poses a significant macroeconomic risk for India, mainly due to higher energy prices rather than an immediate shortage of crude oil. Russian crude oil has become a crucial component of India's energy security, enabling refiners to maintain high utilisation rates and reduce dependence on supplies transiting through the Hormuz Strait.