India, the world’s third largest crude oil consumer, accounted for more than one-third of Russia’s cumulative crude oil exports in the first half of the current calendar year.

Besides, India coupled with China and Turkey bought more than 90 per cent of the crude oil shipped out of the erstwhile Soviet Union during January-June 2024.

According to the Energy Comment series by the Oxford Institute for Energy Studies (OIES), Russian crude exports to China, India, and Turkey accounted for 93 per cent of the total in H1 2024 Calendar Year (CY).

India and China accounted for the lion’s share at 48 per cent and 34 per cent, respectively, the commentary, by Bassam Fattouh and Andreas Economou, added.

As per the data from energy intelligence firm Vortexa, India’s crude oil imports from Russia during H1 2024 averaged at around 1.6 million barrels per day (mb/d) compared to roughly 1.7 mb/d imported in the year-ago period.

Evolving trade dynamics

Particularly for India, the Energy Comment pointed out that the transformation has been “phenomenal”. Prior to the 2022 sanctions on Russian oil, India’s largest annual intake of Russian crude was 52,000 barrels per day (b/d) in 2017.

In 2023, India’s imports of Russian crude averaged nearly 1.8 mb/d accounting for nearly 40 per cent of the country’s total imports, while on a monthly basis they reached as high as 2.2 mb/d,” it added.

There are reports that India’s state-owned refineries are considering entering into long-term oil supply agreements with Russia. But this has not been without its challenges, the latest Energy Comment said. For instance, it said that “payment issues” have caused the diversion of some Russian cargoes away from India.

“Russia has recently announced that it has accumulated billions of rupees that it hasn’t yet found a use for. Also, the US and its allies have stepped up the enforcement of sanctions creating difficulties for buyers of Russian oil and idling many tankers used in the transport of Russian oil,” it added.

Oil price trends

After the price spike above $100 per barrel sparked by the Russia-Ukraine war, Brent has mostly traded in a relatively narrow range between $75 and $85 a barrel in last two years, defying uncertainty and shocks, the commentary pointed out.

It also highlighted some key trends currently shaping the oil market and their implications in terms of oil price behaviour, oil pricing, trade flows, and players’ responses.

“Despite the rise in uncertainty, geopolitical tensions and the various geopolitical shocks hitting the oil market, volatility in oil prices has been low and oil prices remain range bound, with the oil market exhibiting strong resiliency,” it said.

Though sanctions and geopolitical shocks did not result in large oil supply losses, they have transformed oil and products trade flows, reduced transparency, created more segmented markets, lengthened trade routes and supply chains, increased costs and logistical complexity and resulted in more constrained optimization for the various players.

The crude oil pricing system has already seen key structural transformations especially with the inclusion of WTI Midland into the Brent basket. As WTI increasingly sets the price of Brent, larger volumes of oil traded globally priced off Brent are now linked to trading activities and the various physical and financial layers around WTI.

This shift will only accelerate as US crude exports continue to break record levels. Also, the availability of higher volumes of spot barrels, increases in the Middle Eastern refining capacity and complexity, and the diversity of players are having important implications for crude pricing in the East of Suez.

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