According to the Center for Research on Energy and Clean Air (CREA)'s monthly monitoring report, India continued to be the second-largest buyer of Russian fossil fuels in October, while the nation imported a total of 3. 1 billion Euros worth of Russian fuel during this period, with crude oil purchases contributing a significant 81 percent, amounting to 2. 5 billion Euros. This figure for crude oil spending remained consistent with September's expenditure. Following China, India stands as the largest consumer of Russian energy, underscoring its pivotal role in the global energy markets amidst ongoing geopolitical shifts.
Detailed Breakdown of Russian Fuel Imports in October
India's total Russian fuel purchases in October were predominantly crude oil, valued at 2. 5 billion Euros, while coal imports followed, accounting for 11 percent (351 million Euros), while oil products made up seven percent (222 million Euros) of the total. In September, India's total spending was 3. 6 billion Euros, which included 2. 5 billion Euros on crude oil, 452 million Euros on coal, and 344 million Euros on oil products. These figures indicate a stable expenditure on crude oil, while there was a slight reduction in the purchase of coal and oil products in October.
Impact of US Sanctions and Indian Companies' Response
On October 22, the United States imposed sanctions on Rosneft and Lukoil, Russia's two largest oil producers, in an effort to curtail the Kremlin's resources for financing the war in Ukraine. In the immediate aftermath of these sanctions, several prominent Indian companies, including Reliance Industries, HPCL-Mittal. Energy Limited, and Mangalore Refinery and Petrochemicals Limited, temporarily halted their imports of Russian oil. In October, Russia dispatched a total of 60 million barrels of crude oil, with Rosneft and Lukoil collectively contributing a substantial 45 million barrels, while despite these targeted sanctions, India's overall crude oil imports from Russia saw an increase, highlighting the complex dynamics of the market.
India's Increasing Reliance on Russian Oil
Traditionally reliant on Middle Eastern oil, India has Notably ramped up its imports from Russia following the invasion of Ukraine in February 2022. The availability of Russian oil at heavy discounts, a consequence of Western sanctions and reduced European demand, made it an attractive option for India. As a result, India's share of Russian crude oil imports rapidly surged from less than one percent to approximately 40 percent of its total crude oil imports. This shift reflects India's energy security strategy and its adaptive response to evolving global geopolitical landscapes.
Month-on-Month Import Growth and Refinery Activity
According to CREA, India's Russian crude oil imports registered an 11 percent month-on-month increase in October. Private refineries contributed to more than two-thirds of India's total imports, demonstrating their significant role in this trade. Concurrently, state-owned refineries nearly doubled their Russian imports on a month-on-month basis in October. This trend indicates that Indian refineries, both private and public, are capitalizing on the favorable terms offered for Russian oil.
The Unique Role of Vadinar Refinery
In a notable development, the Rosneft-owned Vadinar Refinery in Gujarat, which is now sanctioned by the EU and UK, increased its production by 90 percent in October. Following the EU sanctions in July, this refinery has exclusively imported crude oil from Russia. Its imports from Russia saw a 32 percent month-on-month increase in October, marking its highest volume since the full-scale invasion. However, exports from the refinery have seen a significant decline (47 percent compared to the same month last year), reaching their lowest level since May 2023. This suggests a potential shift towards domestic consumption or a search for new export markets for its refined products.
Global Trade Route Shifts Due to Sanctions
CREA reported that imports by sanctioned countries (such as the EU and UK) from six Indian and Turkish refineries utilizing Russian crude oil decreased by eight percent month-on-month in October. Specifically, the EU saw a nine percent reduction, and the UK experienced a substantial 73 percent drop. Conversely, Australia's imports surged by 140 percent to 93 million Euros in October, and US imports also increased by 17 percent to 126, while 6 million Euros. These two nations have not yet announced bans on oil products made from Russian crude, making them crucial markets for these refineries. This highlights the complex and varied impacts of sanctions on global energy trade flows.