Photo: Shutterstock/Montenegro
India now sources 40% of its crude oil imports from Russia, with year-to-date volumes averaging 1.6 million barrels per day (mbpd), according to BIMCO. This marks a staggering 1000% increase compared to 2021, prior to Russia’s invasion of Ukraine.
Indian buyers began ramping up their Russian oil imports in 2022 following sanctions by the EU and the US, which previously purchased about 65% of Russia’s seaborne crude oil exports, according to BIMCO. However, sanctions have forced Russia to turn to new buyers, with India emerging as a key market for its discounted Urals crude oil. These cargoes are supposed to adhere to the G7 coalition’s price cap of $60 per barrel or less.
As a result, Russian crude oil’s share in India’s seaborne imports have increased, making India the largest buyer in mid-2023, consistently accounting for 35-40% of Russia’s seaborne crude oil exports, according to BIMCO. At the same time, India’s seaborne crude oil imports from Persian Gulf countries have decreased from nearly 70% to 45% as the region redirects its exports to North Europe and the Mediterranean.
BIMCO notes that the increase in Russian oil imports to India has led to a 10% rise in the average sailing distance for crude oil tankers and an 8% increase in total tonne miles, despite a 2% drop in volumes. The average sailing distance has increased by 25% compared to 2021.
India’s shift in crude oil buying patterns has led to increased use of Aframax and Suezmax tankers, now accounting for 55% of imports, while the use of VLCCs has decreased. The change has also resulted in an older age profile of ships discharging in India, with the average age increasing by four years and the share of ships older than 20 years rising from 2% to 13%.
BIMCO points out that Russia-India trade will likely continue at current levels under existing sanctions, but the International Energy Agency predicts that India’s rising oil demand may outpace Russia’s production, leading India to seek alternative suppliers.
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