India’s Russian oil imports rose to a near-peak level in June powered by the highest-ever import volumes of Moscow’s key crude grade Urals, as per oil tanker tracking data and industry experts. Additional availability of Russian crude for export markets due to Ukrainian drone strikes on Russian refinery infrastructure and sizable price differential vis-à-vis competing Middle Eastern crude grades have led to higher flows of Russian oil to India in recent months.

The rise in India’s import of discounted Russian oil over the past few months has hit flows from Saudi Arabia the most, with June import volumes from Riyadh falling to the lowest monthly level in over a decade, the data shows.

Indian refiners imported a total of 2.13 million barrels per day (bpd) of Russian crude oil in June, the highest since May of last year, when Russian crude imports had hit a record high of 2.15 million bpd, as per provisional ship-tracking data. from commodity market analytics firm Kpler. India’s Russian oil imports in June were 7.2 per cent higher sequentially, and accounted for as much as 45 per cent of India’s total oil imports for the month.

Oil imports from Saudi Arabia—India’s third-biggest source market for crude—declined over 25 percent sequentially to 0.41 million bpd, the lowest in over 10 years. The primary reason for the decline is seen as the ample availability of Russian crude and its continued price advantage over Riyadh’s oil.

Russian oil imports surge to 13-month high, Saudi volumes crash to decade-low

“Confirming that the largest sufferer of higher Russian inflows have been Saudi term volumes, the June imports from Saudi Arabia came in at … the lowest monthly figure since January 2014,” said Viktor Katona, head of crude analysis at Kpler. According to industry watchers, Urals has a price advantage of $6-7 per barrel over Saudi Arabian medium-sour grades.

Festive offer

Urals, a medium-sour crude, is seen as Russia’s flagship crude grade, and is the mainstay of India’s Russian oil imports. In June, Indian refiners cumulatively bought 1.61 million bpd of Urals crude, the highest ever. India’s Urals import volumes in June accounted for three-fourths of New Delhi’s total oil imports from Moscow. Evidently, the price differential between Urals and competing crude grades from India’s traditional West Asian suppliers was significant enough for Indian refiners to prefer the Russian grade.

“Even though 800,000 bpd imports from Iraq (in June) are nowhere near as weak as Saudi Arabian imports, and are the lowest since February 2024. While definitely not a record low, June inflows (of Iraqi oil) to India were nevertheless marked by a much lower interest in Iraq’s medium sour grade, Basrah Medium. The heaviest Iraqi grade, Basrah Heavy, has been quite stable in terms of Indian interest. So, whatever competes with Urals seems to be losing out nowadays,” Katona said. Iraq is India’s second-biggest source of crude oil.

June also marked a 17-month high in India’s oil imports from the United States (US), making Washington New Delhi’s fourth-largest source of crude oil in June, up a spot from its usual fifth position. Indian refiners imported a total of 0.37 million bpd of crude from the US in June. The increase in import volumes from the US was evidently on account of light American crude—mainly shale oil—becoming relatively cheaper than comparable grades from West Asia. India’s oil imports from the US are mostly of light sweet grades that are routinely blended with heavier barrels from Russia, Iraq, and Saudi Arabia.

“As India imports increasingly more Russian barrels, refiners need some lighter grades, too, to counterbalance the density of heavier grades. For that, US shale oil has become the answer,” Katona said.

Prior to the war in Ukraine, Iraq and Saudi Arabia were the top two suppliers of crude oil to India. But as the West started weaning itself off Russian energy supplies following Moscow’s February 2022 invasion of Ukraine, Russia started offering discounts on its crude and Indian refiners started snapping up the discounted barrels.

As the world’s third-largest consumer of crude oil with a high import dependency level of over 85 percent, India is extremely sensitive to oil prices. Although trade sources have indicated that discounts on Russian crude have shrunk considerably over the past months, Indian refiners have evidently remained keen on buying Russian oil as given the high import volumes, even lower discount levels lead to significant savings.