India's crude oil supplies from Russia and US drop, West Asia rise

Iraqi and Saudi Arabian supplies to India were consistent in February as Russian shipments declined--with Washington’s sanctions on Moscow taking effect Friday after a grace period, according to ship tracking data, industry sources, and sanction documents.

 

The gap between Russian crude oil shipments to India and Iraqi supplies — India’s two biggest sources — shrank to its lowest level since December 2022, as the toughest US sanctions in January led to a rebound in West Asian supplies. The shrinkage is notable because just four months ago, in November 2024, Russia supplied India with twice as much oil as Iraq.

 

Imports of Russian oil were 280,000 barrels per day (bpd) more than Iraqi oil in February, according to Paris-based market intelligence agency Kpler.

 

When the Ukraine war began in February 2022, Iraq — then India’s biggest supplier — delivered over 1 million bpd of oil to India, while Russia supplied none. By June of that year, Russian shipments had breached Iraq’s and maintained the lead until this month.

 

India imported 1.4 million bpd of Russian oil in February, a 15 per cent drop from January, Kpler data showed. Iraqi supplies averaged 1.12 million bpd, and Saudi supplies averaged over 700,000 bpd during the period, according to Kpler. The share of Russian oil in India’s crude basket fell below 30 per cent in February for the first time since January 2023, compared with a 38 per cent share for the entirety of 2024. Iraq’s share in February was 3 percentage points higher than last year’s annual average and that of Saudi Arabia was 1.5 percentage points higher. 

 

It is unclear how supplies in March will unfold, with top refining executives foreseeing a 20-30 per cent decline in Russian imports, while traders in the market forecast higher shipments next month. Another uncertainty is the prospect of a ceasefire in Ukraine, potentially brokered by US President Donald Trump, which could lead to the easing of sanctions and the disappearance of Russian discounts, said a senior executive from a state refiner.

 

Geopolitical uncertainties are making oil prices volatile, with fluctuations since the US sanctions were announced in January. The European benchmark Brent crude surged from $74 a barrel in early January to around $82 per barrel on 15 January, dropped to nearly $73 per barrel on news of a possible Ukraine ceasefire, and then rose more than 1.5 per cent on Thursday as supply concerns resurfaced after Trump tightened sanctions on Venezuela.

 

However, amid all the uncertainty, the resurgence of West Asian crude oil this year, led by Iraq and Saudi Arabia, appears certain. Indian refiners find Basrah Light and Arab Mix the most suitable and reliable for their facilities.

 

The decline in Russian shipments in February followed shrinking discounts, which fell to around $2 per barrel, and supply disruptions due to sanctions, a top executive from state-run refiner IndianOil said.

 

Indian refiners need at least a $3-per-barrel discount on average to derive value from Russian barrels.

  Imports of US crude oil nearly halved in February to 155,000 bpd from 293,000 bpd in January. The US oil share in the Indian market was just 3 per cent in February, down from a 4 per cent average for 2024, Kpler data showed.

 

The decline in US oil shipments comes as Trump pressures Indian Prime Minister Narendra Modi to buy more oil and gas to trim a $36 billion trade gap.

 

''India is open to purchasing more US crude, but the higher transportation costs compared to oil from West Asia can make US oil less competitive,'' said Darshan Ghodawat, CEO, AVA Global Logistics. A typical voyage from the US to India through the Suez Canal takes about 20 to 25 days. However, if the Suez Canal is closed then ships must circumnavigate Africa via the Cape of Good Hope and the journey can extend by approximately 30 days, he added. A longer route adds to the fuel costs and other operational expenses.

 

US crude oil shipments surged fourfold to 293,000 bpd, or a 6 percent share of total crude imports, in January but failed to sustain momentum in February. A top executive from a state refiner called US crude oil “an opportunistic purchase”, reflecting the challenges Indian policymakers face in increasing shipments.

 

Washington imposed its most stringent sanctions on Russia on 10 January, targeting 183 tankers, two major insurers, and two large Russian oil and gas producers. Cargoes were permitted to be delivered and paid for by February 27.