India boosts Russian oil imports amid Middle East tensions, securing cheaper crude. What's the impact on fuel prices?
India has traditionally sourced a large portion of its oil needs from Middle Eastern countries, with about 60 to 70 percent of its oil coming from the region.
However, recent escalating tensions between Hezbollah and Israel and uncertainties around the Strait of Hormuz have raised concerns about supply disruptions.
In this scenario, Russia has emerged as a reliable and cheaper alternative for Indian refineries. Russian Urals grade crude is available at a discount of $4 to $5 per barrel compared to the global benchmark Brent crude.
This price difference offers a huge savings opportunity for India, reducing the country's import bill and easing pressure on foreign exchange reserves.
According to the latest data from trade intelligence firm Kpler, India's Russian oil imports surged by about 40 percent in June to a record 2.66 million barrels per day (mbpd).
With this massive increase, Russia's share in India's total crude oil imports has grown to nearly 50 percent. This highlights India's growing reliance on Russia for its energy needs.
In comparison, the United Arab Emirates (UAE) was the second-largest supplier with 636,000 bpd, followed by Saudi Arabia with 384,000 bpd.
Due to tensions in the Middle East, Brent crude had jumped 2.2% to $82.30 per barrel on Monday, although it softened later.
India imports crude oil worth approximately $123 billion annually. It is estimated that a $1 increase in the price per barrel increases the country's import bill by about ₹18,000 crore.
Cheaper Russian oil acts as a cushion for India, protecting it from such global price shocks.
Prashant Vashisht, Senior Vice-President at ICRA Ltd, believes that Russia will remain a key source for India's oil needs. He stated that while the UAE and Saudi Arabia are also significant suppliers, the use of alternative export routes is increasing due to regional tensions.
Despite fluctuations in the global market, oil marketing companies in India have kept fuel prices stable. Here are the petrol and diesel prices in major cities:
| City | Petrol (Rs./Litre) | Diesel (Rs./Litre) |
|---|---|---|
| New Delhi | ₹102.12 | ₹95.20 |
| Mumbai | ₹111.21 | ₹97.83 |
| Kolkata | ₹113.47 | ₹99.82 |
| Chennai | ₹107.87 | ₹99.65 |
In conclusion, the increasing import of cheap crude oil from Russia is a strategic win for India. It not only benefits the country economically but also strengthens India's energy security by ensuring a stable supply in an unstable global energy landscape.
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