Russian Oil Imports Save India $7.9B in FY24

Chennai: Russian oil imports led to savings of $7.9 billion in the first 11 months of FY24. This helped the value of imported crude and products decline by 15.2 per cent. However, tapering discounts can widen the net oil import bill to $101-104 billion in FY2025.

The value of India’s imports of crude and petroleum products declined by 15.2 per cent during April-February FY2024, even as volumes rose slightly in this period. This was supported by the fall in global crude oil prices as well as savings from discounted Russian crude.

According to ICRA, India made savings on oil import bills amounting to $5.1 billion in FY23 and $7.9 billion in 11M FY24. In volume terms, the share of crude petroleum imported from Russia jumped to 36 per cent in 11M FY2024 from 2 per cent in FY2022, while that from West Asian countries like Saudi Arabia, the UAE and Kuwait fell to 23 per cent from 34 per cent.

The unit value of imports from Russia was 16.4 per cent and 15.6 per cent lower than the corresponding levels from West Asia in FY2023 and 11M FY2024, respectively.

However, the monthly discounts relative to price have narrowed sharply over the fiscal to 8 per cent on an average between September and February from 23 per cent in April-August FY2024. Consequently, the savings from Russian crude have dipped to $2 billion from $5.8 billion.

If the discounts on purchases of Russian crude persist at the prevailing low levels, ICRA expects India’s net oil import bill to widen to $101-104 billion in FY2025 from $96.1 billion in FY2024, assuming an average crude oil price of $85/bbl in the fiscal.

A $10/bbl uptick in the average crude oil price for the fiscal pushes up the net oil imports by $12-13 billion during the year.