Russia's oil exports to China overtake India for first time since December 2023

Amid fresh US sanctions on Russian oil, Moscow's crude exports to China have surged past shipments to India for the first time since December 2023, according to data from commodity market analytics firm Kpler.

In the first 10 days of March, Russian crude oil loadings for India stood at approximately 590,000 barrels per day (bpd), significantly lower than the 1.11 million bpd shipped to China. The shift in supply dynamics comes at a time when India has been the largest market for Russian crude, owing to its growing energy demands, in contrast to the slowing demand growth in China.

Impact on India's oil import bill

The decline in Russian crude shipments to India could inflate New Delhi's oil import costs, as Moscow has been offering discounted rates. In February, Russian crude oil loadings for India were as high as 1.6 million bpd, compared to 1.1 million bpd for China. However, the new sanctions appear to have altered the flow of Russian crude in early March.

Following the US sanctions imposed on January 10, Indian oil marketing companies (OMCs) confirmed they are not procuring crude from sanctioned Russian entities. Indian Oil Corporation Limited (IOCL) Chairman A S Sahney had earlier stated that the company was specifically sourcing "clean" Russian crude—ensuring that suppliers, insurers, and tankers were not under sanctions. State-run Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) have adopted a similar approach to avoid potential repercussions.

US sanctions and the Russian oil trade:

The US, under former President Joe Biden, imposed fresh sanctions on January 10 targeting Russian oil producers Gazprom Neft and Surgutneftegaz, along with approximately 180 tankers involved in transporting Russian crude. The sanctions aimed to cut Moscow's oil revenues, which are being used to finance the war in Ukraine, while also disrupting Russia's shadow fleet of oil shipments.

Despite the recent drop in Russian oil shipments to India, analysts suggest the trend could be temporary. "In the first 10 days of March, loadings for India from Russia have been low. However, this could be a one-off event, and shipments may pick up in the coming months," said Sumit Ritolia, senior oil refining analyst at Kpler.

India's continued dependence on Russian oil:

Since the onset of the Ukraine war in February 2022, India has significantly increased its crude oil imports from Russia, which now account for nearly 30% of the country's total imports—up from just 0.2% in 2022. Indian OMCs have been in discussions with Moscow to secure a long-term crude supply deal, as they currently purchase Russian oil from the spot market. However, no agreement has been finalised so far. BPCL recently stated that it is seeking deeper discounts of $5-6 per barrel on Russian crude for a term deal.

Despite the absence of a formal agreement, Russia remains a crucial supplier for India. Since the Ukraine conflict began, India has spent approximately €112.5 billion (around Rs 1.5 lakh crore) on Russian crude oil, according to the Centre for Research on Energy and Clean Air (CREA). In comparison, China has purchased Russian crude worth €170 billion in the same period.