A fierce battle is brewing in India the place Russia has undercut the worth of oil from its OPEC+ ally Saudi Arabia, paving the best way for Moscow to develop market share in one of many largest crude importers.
Russian barrels have been cheaper than Saudi crude throughout April by June, with the low cost widening to virtually $19 a barrel in Could, in accordance with Bloomberg calculations based mostly on Indian authorities knowledge. Russia surpassed the dominion because the second-biggest provider to India in June, ranked simply behind Iraq.
India and China have grow to be keen customers of Russian crude as most different patrons shunned its barrels following the invasion of Ukraine. The South Asian nation imports 85% of its oil wants, and low cost provides present some financial aid because the nation faces elevated inflation and a document commerce hole.
The nation’s crude import invoice swelled to $47.5 billion within the second quarter after a surge in world costs coincided with rebounding gas demand, in accordance with authorities knowledge. That compares with $25.1 billion in the identical interval final yr, when costs and volumes have been decrease. Oil has tumbled not too long ago on issues over an financial slowdown, providing some respite to customers.
“Indian refiners are going to try to get their arms on the most affordable crude doable that works with their refinery and product configurations,” mentioned Vandana Hari, founding father of Vanda Insights in Singapore. “Russian crude matches that invoice for now. The Saudis and Iraqis usually are not fully dropping out as a result of they’re directing extra provide to Europe.”
Whereas the low cost of Russian oil to Saudi crude narrowed in June, barrels have been nonetheless round $13 cheaper, averaging about $102. That compares with a premium of simply over $13 in March, though most of India’s month-to-month provide would have been mounted previous to the invasion in late February. The dominion was the second-biggest provider to India in 2021, whereas Russia was the ninth largest.
Iraq was the most important crude provider to India and has maintained that spot this yr by June. Oil from the OPEC producer was round $9 a barrel increased than Russian barrels in Could, however was at a reduction in all different months. India’s imports from Russia have surged tenfold since March.