By Sanjeev Oak

In May, India achieved a historic milestone by importing record-high volumes of discounted crude oil from Russia. Russian oil accounted for an impressive 46% of India’s total oil imports, marking a significant shift in the country’s energy strategy. This influx of affordable oil has helped stabilize domestic fuel prices even as global markets grapple with surging costs. Moreover, India has emerged as a key fuel exporter, solidifying its position in the global energy market.

A Surge in Russian Oil Imports

India’s discounted crude oil imports from Russia reached an all-time high in May, with over 46% of its total oil imports sourced from Russia. Reports indicate that Russia offered India a discount of $10 per barrel. For instance, in April, including freight costs, India secured Russian oil at $68.21 per barrel. By comparison, oil from Saudi Arabia and Iraq was priced significantly higher, at $86.96 and $77.77 per barrel, respectively.

According to Vortexa, India imported 8.6 million tons (62.8 million barrels) of Russian oil in May, while Kpler estimated the figure at 66.7 million barrels. This surge catapulted Russia to become India’s largest oil supplier, surpassing traditional partners like Iraq and Saudi Arabia. Iraq accounted for only 839,000 barrels per day (BPD), or 18% of India’s imports, while Saudi Arabia’s contribution stood at just 560,000 BPD (12%).

Breaking Western Oil Caps

India’s approach has defied price caps imposed by the G7 and European Union on Russian oil. These sanctions, aimed at curbing Russia’s economic influence, limited the price of Russian crude to $60 per barrel. Despite this, India has leveraged Russia’s discounted oil to significantly lower its energy expenses.

Indian oil companies have not only reduced costs but also profited by exporting refined products like diesel and petrol to Europe, where energy prices remain high. This has drawn criticism from the European Union, which questioned the origin of India’s refined oil exports. Indian External Affairs Minister S. Jaishankar dismissed these concerns, asserting that the refined oil is no longer classified as Russian once processed in India, effectively bypassing sanctions.

Economic Implications

India’s reliance on discounted Russian oil has yielded multiple benefits. The country has managed to stabilize domestic fuel prices over the past year despite global volatility. This, in turn, has helped control inflation and support economic growth.

Russia’s strategic pivot to India following sanctions has also opened new revenue channels for Moscow. Indian banks have facilitated payments through Vostro accounts, ensuring compliance with international regulations while maintaining uninterrupted oil trade.

Global Challenges and India’s Resilience

The global economic landscape remains turbulent. The United States and Europe are bracing for potential recessions, with Germany already grappling with economic contraction. Inflation, rising costs, and sluggish growth rates pose significant challenges for major economies.

In stark contrast, India continues to shine as the world’s fastest-growing major economy. A recent Morgan Stanley report lauds India as a “reassuring beacon of economic stability,” attributing much of its success to prudent fiscal management and strategic energy policies.

A Future Powered by Strategy

India’s ability to secure discounted oil has not only mitigated inflation but also positioned the nation as a prominent player in the global energy market. While challenges remain, including geopolitical tensions and evolving trade dynamics, India’s resourceful approach has ensured its economy stays on a robust growth trajectory.

With record-breaking imports, controlled inflation, and a burgeoning export profile, India is reaping the benefits of its strategic pivot to discounted energy supplies—a move that underscores the resilience and adaptability of its economy in an increasingly uncertain world.