(MENAFN) India has experienced substantial savings on oil imports over the past two years, thanks to discounted crude purchases from Russia, as reported by the Times of India citing data compiled by ICRA Research ratings agency.
According to the report, India managed to save an estimated USD5.1 billion on oil imports during the 2022-23 financial year, followed by an additional USD7.9 billion in the first 11 months of 2023-24. Analysts attribute these savings to the significant increase in the procurement of Russian oil by India.
The shift towards Russian crude stemmed from Moscow's strategic move to offer substantial discounts on its oil, aimed at attracting new markets following the loss of traditional buyers due to the ongoing conflict in Ukraine and the subsequent imposition of sanctions by Western nations. These sanctions, which include a USD60-per-barrel price cap on Russian oil, have prompted Moscow to explore alternative markets, with India emerging as a key beneficiary of discounted prices.
India, Asia's third-largest economy and the world's third-largest oil consumer, heavily relies on imports to fulfill approximately 80% of its crude demand. The substantial reduction in the oil import bill is proving instrumental in maintaining the Indian government's fiscal stability and aiding efforts to mitigate inflationary pressures.
Recent data from the Indian Commerce Ministry reveals a remarkable surge in the share of Russian crude in India's oil import basket, soaring to approximately 36 percent between April 2023 and February 2024 from a mere 2 percent in the previous fiscal year. Despite fluctuations in the discounts offered by Russia, with reductions from double digits in mid-2022 to around 8 percent on average in the past six months, India's demand for Russian crude has remained resilient, even amidst ongoing efforts by Western nations to enforce sanctions.
The utilization of discounted Russian oil has not only helped India achieve significant cost savings but has also underscored the geopolitical dynamics surrounding energy markets.
Moreover, New Delhi's ability to leverage discounted crude imports from Russia highlights its strategic maneuvering amidst global uncertainties and sanctions regimes, ultimately bolstering its energy security and economic resilience.
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