Shillong, June 16: India and China, the world’s top oil consumers, have continued their significant purchases of heavily discounted Russian crude oil, according to a report by the International Energy Agency (IEA). The two countries accounted for as much as 80 percent of Russia’s oil exports in May, reflecting their increasing reliance on Russian oil.
The Paris-based energy agency stated in its latest Oil Market Report that India has substantially increased its purchases from almost nothing to close to 2 million barrels per day. Meanwhile, China has raised its liftings by 500,000 barrels per day to reach 2.2 million barrels per day. The demand from both countries has contributed to the significant market share held by Russia’s crude oil exports.
In May 2023, India and China together accounted for almost 80 percent of Russian crude oil exports, as highlighted by the IEA. Additionally, Russia constituted 45 percent and 20 percent of crude imports in India and China, respectively.
The shift towards Asian markets can be attributed to the circumstances surrounding Russia’s traditional crude export markets in Europe, which have implemented import bans. Furthermore, the G7’s shipping restrictions have also influenced the redirection of Russian seaborne crude to Asia. Currently, more than 90 percent of Russian seaborne crude is headed to Asia, a substantial increase from the pre-war levels of 34 percent.
India’s imports of Russian oil in May were 14 percent higher than in April, setting a fresh record high for Russian crude flows into the country. The ongoing incentive to purchase cheap Russian crude remains supported by significant discounts. The main crude export grade from Russia, Urals, experienced an average discount of USD 26 per barrel compared to Dated Brent during the first three weeks of May. In contrast, the discount was only USD 3.70 per barrel in January 2022.
The significant buying interest from India and China reflects their strategic focus on securing discounted Russian crude oil supplies. These developments have notable implications for the global oil market dynamics and underscore the growing influence of Asian economies in the energy sector.