India's Crude Oil Import Story: Understanding Price Dynamics and Strategic Sourcing

The Changing Dynamics of India's Oil Basket

India's crude oil import strategy has undergone a remarkable transformation. Russia has emerged as India's largest crude oil supplier, contributing over one-third of the country's total oil purchases at approximately 1.6 million barrels per day, despite initial US pressure to curb this trade. This shift from traditional Middle Eastern suppliers reflects India's pragmatic approach to energy security and cost optimization.

Iraq maintains its position as the second-biggest crude oil supplier at around 881,115 barrels per day, followed by Saudi Arabia at 603,471 barrels per day and the UAE at 594,152 barrels per day. The United States ranks as India's fifth-largest supplier at 206,667 barrels per day, representing a modest but strategic component of India's diversified import portfolio.

Price Variations Across Major Suppliers

The crude oil pricing data reveals significant variations across different supplier nations during July and August 2024. Iraq and Russia consistently offered the most competitive prices, with Iraq's crude priced at $68.0 per barrel in July and $69.7 in August, while Russia's prices stood at $69.0 in July and $70.9 in August. These lower prices explain why these nations have become India's primary suppliers, as Indian refiners prioritize economical feedstock options that deliver high gross product worth margins.

In contrast, Saudi Arabia and the UAE commanded premium prices, with Saudi crude averaging $77.5 in July (though declining to $75.8 in August) and UAE crude at $74.3 in July, rising to $76.0 in August. The January-August average prices further illustrate this pattern, with Iraq at $71.0, Russia at $71.3, Saudi Arabia at $76.0, UAE at $78.0, and US crude at $79.0 per barrel.

Market Trends and Price Movements

The July to August period witnessed interesting price dynamics. Iraqi and Russian crude experienced modest price increases of 2.50% and 2.75% respectively, reflecting steady demand despite global market uncertainties . UAE crude also saw a 2.29% increase, while Saudi Arabian crude declined by 2.19%, and US crude experienced the most significant drop of 5.41% .

These price movements occurred against a backdrop of global market volatility. Oil prices in July 2024 rose by 1.3% month-over-month after two consecutive months of decline, driven by supply concerns related to geopolitical risks in the Middle East and strong US demand during the summer driving season. However, demand concerns from China's weakening economy and OPEC+'s decision to maintain its policy of unwinding production cuts tempered price gains in the latter half of the month.

Why Russia Became India's Top Supplier

The surge in Russian crude imports to India is directly linked to Western sanctions imposed following the Ukraine conflict. The European Union banned seaborne Russian crude oil imports in December 2022 and petroleum products in February 2023. Additionally, the G7 countries and EU implemented a $60 per barrel price cap on Russian crude oil, causing the Urals price (Russia's benchmark) to trend at approximately 70% of the North Sea Brent price since April 2022.

This price competitiveness transformed Russia from accounting for just 1% of India's crude oil imports in 2017 to 36% in 2024. By October 2024, India's monthly imports from Russia reached an all-time high of 10.38 million tons, surpassing traditional Middle Eastern suppliers. Russian crude oil's market share rose from negligible levels to becoming India's single largest supplier, driven by its economic viability and high refining margins.

Strategic Implications for Indian Refiners

Indian refiners have demonstrated remarkable adaptability in optimizing their crude slate. The $6-10 per barrel price differential between Russian/Iraqi crude and Middle Eastern premium grades translates into substantial cost savings for India's energy-intensive economy. With India importing approximately 4.7 million barrels per day in September 2025, these price differences result in savings worth hundreds of millions of dollars monthly.

The diversification strategy also provides India with negotiating leverage. By maintaining relationships with multiple suppliers across Russia, the Middle East, and the Americas, India can adapt to changing geopolitical circumstances and market conditions. This approach ensures energy security while maintaining cost competitiveness for Indian industries and consumers.

Global Context and Future Outlook

India's crude oil import patterns reflect broader shifts in global energy trade. The rerouting of Russian oil from European markets to Asian destinations, particularly India and China, has reshaped global crude flows. Saudi Arabia and the UAE, traditionally dominant Middle Eastern suppliers, now compete more aggressively for market share, though their premium grades command higher prices due to quality specifications.

The data from July-August 2024 shows that despite Russia's dominance, India maintains a balanced portfolio that includes significant volumes from Iraq, Saudi Arabia, UAE, and the United States. This diversification strategy protects India against supply disruptions from any single source and allows refiners to optimize their crude slate based on quality requirements and economic considerations.

Looking ahead, India's crude oil import strategy will likely continue evolving based on price competitiveness, geopolitical developments, and refinery configurations. The country's position as the world's third-largest crude oil importer, with annual imports valued at over $150 billion, ensures that its sourcing decisions significantly impact global oil trade patterns. As India's economy continues growing, its sophisticated approach to crude oil procurement—balancing cost, quality, and supply security—will remain crucial for sustaining economic development while managing energy costs effectively.