India's Russian Oil Spending Reaches EUR 2.5 Billion in October Amidst Sanctions Halt

India's expenditure on Russian crude oil reached EUR 2.5 billion in October, matching the spending from September. The Centre for Research on Energy and Clean Air (CREA) reported that India remained the second-largest purchaser of Russian fossil fuels globally, behind only China.

Following new US sanctions imposed on October 22 against major Russian oil producers Rosneft and Lukoil, several Indian companies, including Reliance Industries, HPCL-Mittal Energy Ltd, and Mangalore Refinery and Petrochemicals Ltd, have temporarily suspended their imports from Russia. In October, Russia exported approximately 60 million barrels of crude oil, with Rosneft and Lukoil being the primary suppliers.

CREA's monthly tracking report indicates India's total imports from Russia amounted to EUR 3.1 billion, with crude oil accounting for 81% (EUR 2.5 billion), coal for 11% (EUR 351 million), and oil products for 7% (EUR 222 million).

India has significantly increased its imports of Russian oil since the Ukraine invasion in February 2022, a shift from its traditional reliance on Middle Eastern oil. This surge is largely attributed to Western sanctions and reduced European demand, which made Russian oil available at substantial discounts. Russian crude imports rose from under 1% to nearly 40% of India's total crude oil imports within a short period.

In October, India's Russian crude imports saw an 11% month-on-month increase. While private refiners accounted for over two-thirds of these imports, state-owned refineries nearly doubled their Russian crude volumes compared to the previous month. The Rosneft-owned Vadinar refinery, which is now subject to EU and UK sanctions, reportedly increased its production to 90% in October and has been importing crude solely from Russia, with imports rising 32% month-on-month.

Impact:

This news highlights India's continued energy procurement strategy despite international sanctions, balancing its energy needs with geopolitical considerations. The temporary halt in imports by key Indian companies due to sanctions could lead to supply chain adjustments and potentially affect refining margins if alternative crude sources are more expensive. The broader implications for global oil markets and pricing dynamics remain a factor for Indian investors.

Impact Rating: 7/10

Difficult Terms:

Sanctions: Penalties imposed by countries or international organizations on other countries, individuals, or entities, often to influence their behavior.

Crude oil: Unrefined petroleum extracted from the ground, used to produce various fuels and products.

Fossil fuels: Natural fuels such as coal, oil, and gas, formed from the remains of ancient organisms.

Refiners: Industrial facilities that process crude oil into more useful products like gasoline, diesel, and jet fuel.

Month-on-month increase: A comparison of a figure in one month to the same figure in the previous month, showing the percentage change.