As competition increases, Russia undercuts Saudi oil in India

5 Aug 2022 , 07:41 AM

Russia has lowered the price of oil from its OPEC+ ally Saudi Arabia, opening the door for Moscow to increase market share in one of the largest crude importers. A tough competition is developing in India as a result.

Between April and June, Russian barrels were less expensive than Saudi crude, with the difference growing to roughly $19 per barrel in May, according to calculations made by Bloomberg using information from the Indian government. In June, Russia eclipsed the monarchy to take over second place behind Iraq as India’s largest supplier.

Since most other purchasers avoided Russian oil after the invasion of Ukraine, only India and China have continued to do so. The South Asian country imports 85% of its oil requirements, and the low prices of the supplies offer some economic relief as the government struggles with high inflation and a record trade deficit.

According to government statistics, the cost of importing petroleum rose to $47.5 billion in the second quarter as a result of an increase in world prices and a recovery in gasoline consumption. Comparatively, during the same period last year, when prices and volumes were lower, there were $25.1 billion in sales. Due to recent drops in oil prices brought on by worries about an economic slowdown, consumers have experienced some relief.

Although the difference between Russian oil and Saudi crude decreased in June, a barrel of Russian oil still cost around $13 less on average than Saudi crude. Despite the fact that the majority of India’s monthly supply would have been set before the invasion in late February, this premium contrasts to one of slightly more than $13 in March. In 2021, the monarchy ranked second among suppliers to India, with Russia coming in tenth.

Through the month of June this year, Iraq continued to be India’s top crude supplier. In May, oil from the OPEC producer was almost $9 per barrel more expensive than Russian barrels, but in all other months, it was cheaper. Since March, India’s imports from Russia have increased tenfold.