Thu. Apr 25th, 2024

India’s procurement of Russian crude has dwindled to an 11-month low, signaling a departure from its sustained defiance of Western pressure amid the Ukraine conflict.

Recent figures reveal that Indian refiners purchased 1.45 million barrels per day last month, down nearly 16 percent from November and marking the lowest since January. The surge in the cost of discounted Russian oil, attributed to OPEC+ production cuts and heightened demand from China, is cited as a pivotal factor diminishing its appeal to Indian buyers.

This transformation is underscored by the “interplay between India and China,” with both nations now contending for the same oil barrels, according to Viktor Katona, lead crude analyst at Kpler. Despite India’s historical ties with Russia dating back to the Cold War, the country has pragmatically prioritized economic interests over political considerations, reducing its reliance on Moscow for cheap energy.

Russia’s gain from India’s reduced imports is evident, as its crude oil is trading above $85 per barrel, surpassing the $60 price cap imposed by a coalition of the G7, EU, and Australia a year ago. European concerns over Indian refiners bypassing EU sanctions by processing Russian crude for the European market may find some relief with New Delhi’s diminished imports.

India’s economic decision-making remains centered on pragmatism rather than politics, emphasizing the need for energy at the most economical price, as affirmed by Indian Oil Minister Hardeep Singh Puri. While acknowledging logistical challenges, including payment complexities and currency preferences, officials maintain that the shift is fundamentally a result of price considerations.

This development marks a departure from the trend witnessed post-Russia’s invasion of Ukraine when India emerged as Moscow’s second-largest customer. As India navigates these evolving dynamics, its reduced reliance on Russian crude highlights a nuanced approach shaped by economic realities and a desire to secure energy resources at optimal prices.

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