India’s crude oil imports from Russia jumped 21 percent in June, making Moscow India’s second-largest oil supplier, according to figures provided by data and analytics firm Kpler to The Independent. To put this in perspective, by 2021, Russia was only the tenth largest oil supplier to India. Shunned by many of its traditional European buyers after its invasion of Ukraine, Russia’s sale of cheap crude to India rose from zero in January and February to a record 950,000 bpd in June as Delhi eased. For the first time, Indian markets pitted Russia against traditional top supplier Iraq. In June, Iraq sold about 1 million barrels a day to India, marking a marginal drop in imports from Baghdad since May. Imports from Saudi Arabia fell from 697,000 barrels per day in May to 686,000 in June. With Kuwait, imports had fallen earlier this year from a high of 297,000 bpd in February to 100,000 in April. They rose marginally to 233,000 barrels per day in June. Matt Smith, chief oil analyst at Kpler, says the massive increase in Russian crude imports over the past two months has meant “flows have been reduced from top suppliers in the Middle East – Iraq and Saudi Arabia – as well as elsewhere”. It adds that imports are at “historic levels” as they are the highest since the company’s records began in 2013. On the back of post-pandemic recoveries, India’s overall crude oil demand is up nearly 13 percent this year, compared to 2021. India is a major refining hub, importing crude and exporting clean products such as gasoline and diesel. As a result, net exports are also up – by nearly nine percent compared to 2021, making it a lucrative deal for Delhi. “For India, the opportunity to buy cheap Russian oil remains a political balancing act with the West. Getting cheap oil from Russia sounds like a lucrative deal for India in the near term,” Thomas Murphy, lead analyst for South Asia security and political risk at Dragonfly, tells the Independent. However, he notes that the deal may have some political downsides in the long term, as he expects India to face “increasing criticism and diplomatic pressure from both the US and Europe” for neither sanctioning nor holding Russia accountable for humanitarian violations. rights in Ukraine even the conflict has been raging for more than four months. This major shift in India’s oil market is expected to cause discomfort among the South Asian nation’s allies, who have economic and trade ties that go back centuries. Harsh V Pant, professor of international relations at King’s College London, tells the Independent that the Middle East will have to think carefully about its long-term strategy if its biggest buyers India and China gradually stop depending on them. For many countries in the Middle East, the sale of oil is their biggest source of income. Almost 65 percent of the world’s oil reserves are located in the Middle East. India’s bilateral trade with Gulf Cooperation Council (GCC) countries – including Saudi Arabia and the United Arab Emirates – exceeded $150bn (£126bn) in the financial year ending March 2022. But India is making the most of Russia’s reduced oil, he says, as it has created incentives to reach out to other buyers, while the Middle East inflated rates dramatically during the energy crisis. “I don’t think the Middle East will see it as a long-term strategic challenge, but temporarily it has implications for the Middle East… if you have China and India, which are the two biggest oil importers in the Middle East, taking advantage of the Russian bonanza, which may be temporary, but it is there, and no one knows how long the war will last.’ The question of whether Russia will be able to lure those Asian countries with heavy discount deals when Europe completely stops buying oil from it by the end of the year will determine long-term strategies, he says. Because, he adds, simply offering steep discounts is not sustainable in the long run. “The Middle East needs to ascertain whether it needs to continue on this trajectory or there needs to be a recalibration in the oil markets,” he says, adding that India is an important market for the Middle East and for Delhi, reasonable prices are a priority. Supporters of a religious group burn a photo of BJP member Nupur Sharma during a demonstration in Lahore, Pakistan, on June 12 to condemn his derogatory references to Islam (AP) New fissures are also emerging as escalating internal communal tensions have affected India’s ties with Islamic nations. In June, more than 15 Islamic nations condemned derogatory remarks about the prophet Muhammad by a spokesman for India’s ruling right-wing Hindu nationalist Bharatiya Janata Party (BJP). Several Muslim-majority countries, including Qatar, Kuwait and Iran, summoned their Indian ambassadors to protest the comments, while Indian products were pulled from market shelves after Muslim clerics called for a boycott. To control the fallout, the BJP suspended Nupur Sharma and Naveen Jindal, the officials who made these Islamophobic statements but did not apologise, saying only that the party “strongly condemns insults of any religious figure”. Meanwhile, pressure on India to divest from Russian oil will continue to be high as US President Joe Biden meets Saudi Crown Prince Mohammed bin Salman and leaders from oil-rich allies during his trip to the Middle East next month. Maintaining India’s neutral stance on the war in Ukraine despite pressure from the US and the West, Indian Prime Minister Narendra Modi spoke with Russian President Vladimir Putin to discuss bilateral trade and the “international energy situation” on 1 July. This was their fourth phone call since the February 24 invasion. India has increased its purchases from Russia at a time when the UK, US and European Union have imposed heavy sanctions to cut funding to the Kremlin’s war chest. The US banned imports of Russian oil in March, while the EU said it would phase out purchases of oil from Russia by December. Deliveries to EU-27 countries have averaged around 1.2 million barrels per day in recent months – a figure India is approaching. EU imports have fallen by about a third compared to the pre-war period of more than 2.2 million barrels per day. Indian Foreign Minister Subrahmanyam Jaishankar rebuked analysts and world leaders when asked whether India was pursuing economic opportunism in the midst of war. “If India is financing Russia’s oil it is financing the war… Tell me, then buying Russian gas is not financing the war? Is it only Indian money and Russian oil coming to India to finance the war and not Russian gas coming to Europe? Let’s be a little more equal,” Mr. Jaishankar said in June.
