India’s increasing imports of Russian crude oil have led to a decline in OPEC’s share of supply to the world’s third-largest crude importer, according to a Reuters analysis of data from industry sources.
The Organization of the Petroleum Exporting Countries’ share of all Indian oil imports has reached the lowest level in at least 22 years, due to the surge in India’s imports of Russian crude over the past year.
In the Indian financial year ending in March 2023, OPEC’s share of Indian oil supply dropped to as low as 59%, compared to as much as 72% in the previous fiscal year.
Indian refiners have taken advantage of the opportunity to purchase cheap Russian oil, which has led to Russia overtaking Iraq as India’s top crude oil supplier for the 2022/2023 fiscal year, according to trade data cited by Reuters.
Russia accounted for nearly a fourth of India’s crude oil imports in 2022/2023, as India welcomed on average 1.6 million barrels per day (BPD) of Russian crude out of a total of 4.65 million BPD of imports.
Read more: OPEC keeps oil supply outlook steady despite Russian oil price ceiling
“Russian crude is already cheaper than similar Middle Eastern grades and it seems OPEC is harming itself by a reduction in output,” said analyst Ehsan Ul Haq from financial market data provider Refinitiv. The additional cuts are set to further erode the OPEC market share in India, according to the analyst.
India’s fuel demand is rising, and refiners continued to keep crude processing rates at near-record levels in March, government estimates showed last week.
Additionally, some refiners who are not adhering to the Group of Seven (G7) price limit have opted to purchase inexpensive crude oil from Russia. This has contributed to a reduction in OPEC’s market share in India.
New trading partners
In response to the European Union (EU)’s embargo on seaborne Russian oil and price cap on Russian crude, Russia redirected its oil exports to India and China in the past year. This move came after European nations sought to reduce their dependence on Russian energy supplies following Moscow’s incursion into Ukraine.
Russia’s deputy prime minister Alexander Novak has affirmed that the country’s energy industry remains sustainable. Novak stated that energy revenues accounted for 42% of Russia’s federal budget in 2022.
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