India's appetite for Russian crude oil in January rose to unseen levels, continuing to remain above traditional Middle-Eastern suppliers for the fourth month in a row, as refiners rushed to snap up plentiful cargoes available at a discount to other grades.
From a market share of less than 1% in India's import basket before the start of the Russia-Ukraine conflict, Russia's share of India's imports rose to 1.27 million barrels per day in January, taking a 28% share, according to energy cargo tracker Vortexa.
India, the world's third-largest crude importer after China and the United States, has been snapping Russian oil that was available at a discount after some in the West shunned it as a means of punishing Moscow for its invasion of Ukraine.
From a market share of just 0.2 per cent in India's import basket before the start of the Russia-Ukraine conflict, Russia's share of India's imports rose to 28 per cent in January 2023.
Officials attending India Energy Week (IEW) 2023 here said India will continue to buy crude oil from anywhere in the world, including Russia, to meet its energy needs.
The executive body of the European Union has asked its 27-member countries to cap the price of Russian oil at $60 as part of the West's attempt to squeeze Moscow's oil revenues and limit its ability to wage war in Ukraine while keeping global prices and supplies steady.
"Unlike Iran and Venezuela, there are no sanctions on buying oil from Russia. So, anyone who can arrange for shipping, insurance and financing outside of the EU can buy oil," an official said.
The price caps are part of the EU's plan to use its clout in insurance and shipping industries to crimp Moscow.
"We will continue to buy oil from anywhere in the world, including Russia," he said.
Under the price-cap system that kicked in on December 5, companies shipping Russian oil outside of Europe would only be able to access EU insurance and brokerage services if they sell the oil at or under $60.
Industry sources said crude shipments being purchased by Indian companies were below the G7's price cap of $60 per barrel.
"So for all practical purposes, if I can send a ship, cover insurance and device a mode of payment, I can continue to buy oil from Russia," an official said, explaining how the mechanism works. "All options are on the table."
For Russia to keep oil sales going, it and its buyers need to use ships, insurance and financing outside the jurisdiction of the G-7. The U.S. is comfortable with Russia selling its oil outside the cap but using non-Western shipping, insurance and banking services, which will likely be more costly.
Russia's market share in January was an improvement over 26% in December. Iraq, which was relegated to the second spot in October 2022, supplied some 20% of all the oil India imported.
Saudi Arabia shipped 17% while the U.S. improved its share to 9% from 7% in December. UAE supplied 8 per cent crude. All three middle-east suppliers improved their market share by one percentage point each, which came at the expense of Africa, whose share fell from 9% to 6% in January.
The rising share of Russian crude sales to India has also taken a toll on the country's appetite for African crude. This, combined with a tighter market structure, as well as increased volatility in freight markets has led to the share of West African crude dropping from 12.5% in 2021.
Russian crude traded at a record discount of up to $40 per barrel in the aftermath of Russia's invasion of Ukraine as key buyers in Europe shunned Moscow's oil. The bulk of Russia's crude exports flowed to refiners in Asia, with China and India being its key customers.