Oil imports fell 11% in December as supplies from Russia, Saudi fall

Higher domestic demand in Russia, lower exports by Saudi may have reduced Indian uptake

Lower supplies from Russia and traditional West Asian suppliers such as Saudi Arabia and Kuwait dragged down India's crude oil imports by 10.6 per cent in December 2024 to $10.34 billion from $11.57 billion in December 2023, according to official data.

 

Data released by the commerce department shows that imports were down 16.5 per cent sequentially from $12.4 billion of crude imported in November.

 

The data is usually released with a lag of three months.

 

Importantly, imports from Russia fell for the first time in four months in December 2024.

 

This indicates crude supplies from Russia had begun to see a decline in value even before the latest spate of sanctions at Moscow was slapped by the United States in January.

 

Imports from Russia fell 18.48 per cent year-on-year (Y-o-Y) to $3.19 billion in December 2024, down from $3.92 billion in December 2023.

 

Before December, crude flows from Russia had risen by 8 per cent, 53 per cent, and 34.2 per cent in November, October and September, respectively.

 

It had fallen in August due to planned shutdowns for maintenance work at several major domestic refineries.

 

The average price of Brent crude oil was $4.57 per barrel cheaper in December 2024 compared to December 2023.

 

But contracting imports were not only due to a fall in the price of crude oil, but also because of a 12.3 per cent decline in volume-wise imports from Russia, shows data.

 

International analysts had earlier said higher domestic demand in Russia had reduced outward flows, mostly due to Russian refineries resuming operations after scheduled maintenance. However, the falling incidence of discounts may also have played a part.

 

Among other major import sources, Saudi Arabia and Kuwait also sent 43.1 per cent and 38 per cent less oil, respectively. The volume of imports from the two countries was also down by 36.4 per cent and 33.6 per cent, respectively. This is due to falling overall oil exports by both the nations.

 

In early December, Saudi Arabia and its partners in the OPEC+ group had decided to delay a planned easing of the ongoing production cuts. As a result, production cuts of 2.2 million barrels per day were postponed to April 2025.

 

Refiners also cut back on Saudi crude owing to its flagship product Arab Light trading at a premium back then, at about $2.5 higher per barrel than the regional benchmark, making it costlier than alternative supplies, refinery officials said.

 

With other West Asian suppliers (notably Iraq and the UAE) offering more attractive pricing — and with Iraqi crude increasing by nearly 29 per cent — refiners shifted their orders away from Riyadh.

 

Shifting supplies

 

The December figures show that bulk of the demand for crude may have switched to other source nations from January, with more relative ease than had earlier been expected.

 

The administration of the outgoing United States President Joe Biden on January 10 unveiled the broadest package of sanctions against Russia, targeting oil producers, tankers, intermediaries, traders and ports.

 

The US treasury slapped sanctions on upstream oil and gas majors Gazprom Neft and Surgutneftegas.

 

Importantly for India, the US has sanctioned 183 vessels that have shipped Russian oil. Some of these may have been carrying crude oil to India.

 

“It's no secret that global producers and our buyers have worked out some alternative arrangements since then (January). Some of them are still lining up a steady stream of imports. But the move has been less painful than what was initially expected," an official said.