CHART OF THE WEEK 📈
India’s oil imports from Russia have surged to a record of 950,000 barrels per day in June 2022, and accounted for a fifth of overall imports. This has steadily increased from negligible imports from Russia before the Russia-Ukraine conflict. What’s in it for India?
Post the Russia-Ukraine conflict, there was an embargo on trade with Russia on several counts. However, Russia started to offer hefty discounts on oil compared to the Brent and oil from the Middle East. India has been taking advantage of this and getting oil at cheaper prices.
This proves to be supremely beneficial for India since 85% of India’s oil is imported. With oil prices shooting up, and the dollar gaining strength; oil imports would have been doubly expensive.
In June, Russia became the second largest supplier to India, after Iraq, overtaking Saudi Arabia, and accounting for nearly 20% of India’s oil imports.
While this move has attracted criticism from the West, India’s stance of focusing inward has remained clear. Other countries like China and Iran too have been ramping up on their oil imports from Russia in order to benefit from the discounts.
In an increasingly difficult economic scenario, the move comes as a smart tactical move in keeping prices and deficits under check.
💡 Another side benefit - the government has been imposing a windfall tax on oil refiners in India. After all they are the ones importing cheap Russian oil, refining it, and then exporting it to other countries at higher rates. Smart way to further cash in on the situation!