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Russia cuts Saudi oil in India as competition intensifies

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India’s oil imports from Russia: During April to June, Russian barrels were cheaper than Saudi crude.

A fierce battle is underway in India where Russia has slashed the price of oil from its OPEC+ ally Saudi Arabia, paving the way for Moscow to expand market share in one of the biggest crude importers.

According to Bloomberg calculations based on Indian government data, Russian barrels were cheaper than Saudi crude during April to June, with a discount of about $19 a barrel in May. Russia overtook the state as the second largest supplier to India in June, just behind Iraq.

India and China have become willing consumers of Russian crude as most other buyers have shunned barrels after the invasion of Ukraine. The South Asian nation imports 85% of its oil needs, and cheap supplies provide some economic relief as the country faces inflation and a record trade gap.

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India’s oil imports from Russia, Saudi Arabia and Iraq in the last 5 months.

According to government data, the country’s crude oil import bill rose to $47.5 billion in the second quarter following a jump in global prices as well as increased demand for the fuel. This compared to $25.1 billion in the same period last year, when prices and volumes were lower. Oil has recently cracked down on concerns of an economic slowdown, which has brought some relief to consumers.

“Indian refiners are going to try and try their hand at the cheapest crude that works with their refinery and product configuration,” said Vandana Hari, founder of Wanda Insights in Singapore. “Russian crude fits that bill for now. The Saudis and Iraqis are not giving up completely because they are directing more supplies to Europe.”

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India’s oil imports from Russia: Russian oil compared to Saudi crude.

While Russian oil discounts to Saudi crude eased in June, the barrel was still about $13 cheaper, averaging about $102. This compares with a premium of just over $13 in March, though most of India’s monthly supply would have been settled before the invasion in late February. The state was India’s second largest supplier in 2021, while Russia was the ninth largest supplier.

Iraq was India’s largest supplier of crude oil and has maintained that position till June this year. The OPEC producer’s oil was about $9 a barrel higher than the Russian barrel in May, but was at a discount in all other months. India’s imports from Russia have increased tenfold since March.

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