At least $7.17 billion in foreign exchange were reportedly saved by Indian refiners by increasing the purchases of discounted Russian crude oil in the 14 months after the war began in Ukraine.

India, as the world's third-largest consumer of crude oil, heavily relies on imports to meet over 85 per cent of its oil needs.

When Western buyers reduced their oil imports from Russia due to the invasion of Ukraine in February 2022, Moscow responded by offering discounts on its crude. Indian refiners quickly seized this opportunity, making Russia their primary oil supplier and surpassing its previous marginal role.

This strategic move not only secured a reliable oil supply for India but also resulted in significant cost savings for the country.

Between April 2022 and May 2023, India's total oil imports were valued at $186.45 billion.

However, thanks to the discounted prices offered by Russia, Indian refiners were able to save a substantial amount.

If they had paid the average price for crude from other suppliers, the oil import bill would have reached $193.62 billion, reports Indian Express.

The value of oil imports from Russia during this period reached nearly $40 billion.

Indian refiners got an average landed price of $79.75 per barrel for Russian crude, which was approximately $14.5 lower than the average landed price of non-Russian barrels.

This translates to an effective discount of 15.3 per cent compared to the average price of oil imported from other supplying nations.

Although $7.17 billion may not seem like a large sum in the grand scheme of things, the savings are significant as they were accrued by five Indian refining majors.

These Indian refining majors include Indian Oil Corporation, Reliance Industries, Bharat Petroleum Corporation, Hindustan Petroleum Corporation, and Nayara Energy.

The government releases of commodity-wise and country-wise trade data with a delay, and as of now, data up to May 2023 has been made available.

Over the course of 14 months leading up to May, Russian crude accounted for 24.2 per cent of India's oil imports, totalling 280.41 million tonnes or 2.06 billion barrels.

During this period, Russia surpassed traditional heavyweights like Iraq and Saudi Arabia to become India's largest crude supplier.

Iraq held the second-largest market share by volume at 21 per cent, followed by Saudi Arabia with a 16.4 per cent share.

In comparison to the other major suppliers of crude to India during the 14-month period, the landed price of Russian oil was at a discount ranging from 10 per cent (in the case of Iraq) to 22.1 per cent (in the case of the UAE).

The UAE was the fourth-largest supplier of crude to India during this period.

Russian oil was offered at a discount of 19 per cent compared to Saudi Arabian crude.

The United States ranked fifth in terms of oil imports, followed by Kuwait in sixth place.

Calculations show that Russian oil supplies to India were priced 11.7 per cent lower than US crude and 15.4 per cent lower than oil purchased from Kuwait.

The proportion of Russian crude in India's oil import mix has been steadily increasing for over a year and has reached new highs in recent months.

In May, Russian crude accounted for 40.4 per cent of India's total oil imports, while Iraq held a market share of 18.3 per cent and Saudi Arabia had a share of 12.2 per cent, according to trade data.

The average landed price of Russian crude imported by Indian refiners in May was $70.17 per barrel, which was $8.11 per barrel or 10.4 per cent lower than the average price of oil imported from other suppliers.

Iraqi crude had an average landed price of $75.16 per barrel, while Saudi Arabian oil was priced at $84.17 per barrel.

Although the discounts offered are significant for Indian refiners, they are not as high as initially expected. The relatively higher costs of freight and insurance for Russian crude compared to oil from other suppliers are believed to be the main reason.

With Moscow being subjected to Western sanctions due to the Ukraine war, the expenses for transporting Russian oil, such as freight and insurance costs, have reportedly increased significantly.

This implies that although the discounts on the actual oil price may have been substantial, the discount on the landed price, which includes additional costs like freight and insurance, would be much less significant.

Indian refiners

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