Is it true that the Indian imports of oil have substantially gone up in March 2022?

This seems to be a classic case of India making hay while the sun is shining or till the Western sanctions are in progress in Russia. For the month of March 2022, Russian oil exports to India was up four-fold compared to the average export of Russian oil to India in previous months. The Russia oil has suddenly become a lot more attractive for India due to the 20-25% discount that Russia has been offering on its Ural crude.

India is already the world's third-largest energy consumer after the US and China. Instead of worrying about rising prices, India has sought to compensate some of the rising costs of oil by opting for Russian oil where the oil producers are offering hefty discounts to get rid of oil stocks amidst the sanctions. This was necessitated after multiple cargoes of Russian oil from were shunned by the traditional buyers in Europe on account of American sanctions.

For March till date, Indian imports of crude from Russia has been around 360,000 barrels per day (bpd) on an average. That is four times what India imported from Russia during the year 2021. For Russia, the demand support that it is getting from China and India by improving their oil offtake from Russia, is giving them some relief amidst the stringent sanctions imposed by countries like the US, Europe, UK and Australia.

In fact, in the last one month, most of the committed oil cargoes from Russia that could not find buyers in Europe, are being aggressively lapped up by India. Exports to India surged in March but there has been no official statement to that effect by the Ministry of Commerce. Already, the US and UK have already asked India not to violate the sanctions. Last year, Russian crude as a share of Indian crude import basket was less than 5%.

Traditionally, Indian companies avoided oil from Russia due to high shipping costs. That is changing as the discount of $25 / $30 per barrel is more than offsetting the freight disadvantage. For instance, the impact of freight is just about $3-4 per barrel. So the huge discount that Russia is offering, more than compensates for the higher freight cost entailed in bringing Russian oil to India by sea.

India is not too perturbed by the Western warnings regarding the Russian sanctions. It has taken a decision to stand by Russia in this tough hour and it is also economically viable. Payments could still be a major concern due to SWIFT restrictions, but the RBI and the government are simultaneously working on putting in place a rupee-rouble trading mechanism, which will help to circumvent the ban imposed by SWIFT.