Moscow’s portion of India’s oil imports fell to an eight-month low in October as a result of declining discounts on Russian crude oil, while New Delhi’s traditional West Asian suppliers, Iraq, Saudi Arabia, and the United Arab Emirates (UAE), were able to reclaim some of the market share they had given up to Russia.

The Indian Express analyzed official trade data from India and found that, in terms of volume, Russia’s share of India’s oil imports decreased to 31.9% in October from 34.8% in September. It fell for four months in a row from the highest recorded level of 44.7% in June.

However, after rising steadily month over month since June, the combined share of Saudi Arabia, the United Arab Emirates, and Iraq reached a seven-month high of 44.1% in October. Over the last few months, OPEC’s (Organization of the Petroleum Exporting Countries) share of India’s oil imports has recovered primarily due to higher crude supplies from these three nations.

The percentage of OPEC in India’s oil imports increased to 50.2% in October from 49.1% in September. When Russian oil shipments to India began to pick up speed in April 2022, the cartel of foreign oil suppliers held a 71.3% share. The UAE, Saudi Arabia, and Iraq combined accounted for nearly 61 percent of New Delhi’s oil imports. OPEC comprises ten other member countries in addition to these three.

The government does not release grade-wise oil import data, so the average landed price of crude and import volumes from the supplying countries were used for computations, even though the price of crude oil varies greatly depending on grades.

Iraq, Saudi Arabia, and the United Arab Emirates were India’s top crude suppliers before the conflict in Ukraine, with Russia having a minor role. But after Moscow invaded Ukraine in February 2022, the West started to shun Russian oil, so Russia started to offer steep discounts to those who were willing to buy. When Indian refiners began snatching up the cheap barrels, Russia shot to the top of India’s list of oil suppliers. On the list, the UAE, Saudi Arabia, and Iraq have all dropped a spot.

Industry insiders have stated that over the past few months, several factors—such as high oil price volatility, high and opaque shipping and insurance charges, competition from Chinese refiners, export cuts by Russia, and the nation’s domestic demand for petroleum products, the lax enforcement of the West’s price cap on Russian oil, and Moscow’s ability to get around the restrictions—have significantly reduced the discounts on Russian oil.

The trade data analysis indicates that in October, the difference between the average delivered price of oil from Iraq, Saudi Arabia, and the United Arab Emirates and the delivered price of Russian crude, including freight and insurance, was only 5.7%, following a four-month decline. from Iraq, Saudi Arabia, and the United Arab Emirates was only 5.7% in October, down from a peak of 22.7% in June for four months in a row. Comparably, the difference between the average price of oil received from all OPEC suppliers and the discount on Russian oil dropped for four months in a row, from 23.1% in June to 6.9% in October.

Based on trade data, calculations show that Indian refiners saved approximately $3.3 billion in the first half of the current financial year (FY24) by purchasing discounted Russian crude oil. The estimated savings for April through November are $3.55 billion.

Because Russian oil cargo prices are so opaque, it is unclear what the actual discounts are since Indian refiners began increasing their imports of Russian oil. In contrast to oil from the majority of other suppliers, Russian crude is purchased by Indian refiners on a delivered basis, meaning that in addition to the cost of the oil itself, the cargo price also includes the cost of freight and insurance. As a result, a comparison between the average landed price of Russian crude and the average price of oil imported from other suppliers serves as the best available marker for discounts.